juwi Renewable Energies – A Sunny Outlook
Even in the face of the COVID-19 pandemic, juwi Renewable Energies’ Operations and Maintenance business is optimistic about their prospects.
juwi Renewable Energies is a German-owned company which entered the South African market in 2010, and one of its core business models is the operation and maintenance of solar PV facilities. From those early days, that side of the business has grown until today it operates 20% of the built solar farms in South Africa, delivered via its subsidiary company juwi Solar ZA O&M.
In many ways, the story of this company’s growth goes parallel to the growth of the solar industry in South Africa.
“Ten years is long enough for a market to mature quite substantially. What we’ve seen in the local market is a whole lot of new competitors, but what they don’t have is our track record,” says Greg Austin, Managing Director of juwi Renewable Energies and juwi Solar ZA O&M. “That track record is built on very competent and capable site management teams as well as our so-called back office team. The management team, the technical team, that support of all the ongoing site operations is absolutely tier-one. And able to rely on the juwi Group’s technical competence distributed across its global operations.”
Leading Black Economic Empowerment
As well as having an impressive track record & team behind them, juwi is also in a leading position concerning the South African Government’s policies supporting transformation objectives relating to Black Economic Empowerment.
“juwi Solar ZA O&M undertook a strategic change in ownership during the course of last year leading to a major acquisition in the company by the Reatile Group, a fully black-owned company active in the energy and chemicals space in South Africa,” Austin says. “They have made strategic investments this year into building and operating renewable energy assets, as well as into some of juwi’s construction project companies. For juwi Solar ZA O&M this transaction brings about a 51% black ownership which is a major differentiator for a solar O&M operator in the country at this point in time.”
Austin believes this is important not only in the context of South Africa’s history but also to accelerate the transformation of its economy.
“We’re fully supportive of the country’s transformation agenda, and by entering into this strategic relationship with Reatile we are able to achieve these multiple objectives simultaneously,” Austin points out.
While it’s clear the benefits for project owners that come with contracting with juwi as an Operations and Maintenance service provider, the renewable energy sector that is juwi’s core business is one that is typically based on long procurement cycles that can make it difficult for businesses to plan ahead.
“I would say that the bulk of the contracts that we have are in the public procurement programme of government, the Renewable Energy Independent Power Producer procurement programme, or REIPP,” Austin says. “The first procurement round was in 2011; over the years we’ve only had four REIPP procurement rounds and that talks to the substantial delays the renewables market has faced. It’s difficult to build a business in the context of an uncertain market direction.”
But these challenges exist for everyone in the South Africa renewables market, and Austin reflects on the fact that juwi has continued to navigate these obstacles, with backing from its parent company. And at the same time, the development of renewables as a primary provider of reliable, clean and cost-effective energy is on the march, with the global uptake and long-term outlook beyond doubt.
“We are supported not only by juwi as a group headquartered in Germany but also via ten international subsidiaries of which we are one. We have a depth and breadth of technical expertise second-to-none in the world relating to solar photovoltaics (PV),” Austin says. “We have this deep global expertise, reflected in the over 400 MW of solar PV we will be operating by year end in South Africa alone, while globally we’re operating and maintaining over 2500 MW of solar PV farms.”
Adjusting to New Circumstances
Of course, another industry-wide issue has been the encroachment of the COVID-19 pandemic, and even during a pandemic people and the country’s economy require reliable power supplies.
“As a result we’ve been fortunate that in South Africa, when we went into lockdown on the 27th of March this year, there were already a few ringfenced activities that were deemed critical for our economy that had to continue,” Austin says. “One of those was Operations and Maintenance of energy generating facilities of which obviously our solar PV farms form a part. So those contracts had to be serviced.”
Of course, while the contracts still needed to be serviced, they would have to be serviced under an entirely new set of circumstances.
“There was an adjustment period when we needed to install new site health and safety procedures for ourselves and our suppliers and service providers,” recalls Austin. “I’d say that outside of that the major impact we’ve experienced is that we’ve had to restrict the movement of people between sites, and head office in Cape Town and the sites, to cars only. Being a company with widespread projects across the country we were adding time in travelling between project sites. Where we might fly for two hours we now drive for ten.”
Looking beyond COVID, juwi has big plans for the future, including a shift in strategy when it comes to tenders.
“We’ve recently built up a business development team as of last year to target and really articulate to the market our strategic response to delays in procurement rounds,” Austin says. “Their goal is to target the first rounds of tenders for solar farms procured between 2011 and 2013, that are coming up for Operations and Maintenance service contract renewal. Thus we’ve gone after third-party Operations and Maintenance contracts, which is a different strategy from our normal business model. Where typically we provide O&M services for at least the first five years on the back of being awarded solar EPC (design and build) contracts, we’re now actively engaging with project owners looking to secure our expert O&M services into projects in which we were not involved during the construction phase.”
It’s a strategy that is already paying off.
“We’ve had our first successes in this area. We entered our first contract of this kind in April this year, and we’ve built a substantial pathway to targeting hundreds of additional megawatts with very good prospects,” Austin tells us. “What the immediate future holds is developing that part of our business. The second and related aspect of our strategy is to add value to our business development activities focussed on hybrid power projects, where we develop, engineer, construct and operate power projects focusing on the mining sector; these hybrid power projects integrate renewables (solar and wind) with thermal power plants and battery energy storage systems across sub-Saharan Africa. We follow that business model with the Operations and Maintenance service operating for solar, wind and battery systems onto mines and we’re seeing positive uptake in this area of our business.”