Cape Town - South Africa is starting to build an investment climate for wind energy, which is growing faster than any other form of renewable energy globally, although most proponents of wind farms believe the country has lost ground by not moving fast enough.
As European companies look to export the technology they have developed in recent years, north African economies are becoming increasingly wind-powered.
Egypt, Morocco and Tunisia have a combined 229 megawatts of wind energy in place. It is a fraction of the 18 420MW of wind energy installed by Germany, but from a zero base, the north African statistics are significant.
By comparison, South Africa has almost nothing, apart from the three demonstration wind turbines installed by Eskom at Klipheuwel in Western Cape, as the utility investigates whether to make a business case for wind energy. Critics of the Eskom project claim it has been situated in an area known to have limited wind, thus setting the stage for claims that South Africa is not suitable for large-scale wind energy electricity generation.
However, the project developers of a privately owned wind farm at Darling, which has been given the green light after six years of uncertainty, are hoping to sign contracts for turbines later this year.
Measured against South Africa's total energy requirements of 37 000MW, the 5MW Darling wind farm is tiny, but pivotal, as it has pioneered regulatory and commercial processes for wind farms and bulk renewable energy independent power producers.
"We've learned a lot from Darling - about wind energy grid connection and integration, about environmental impact assessments, about negotiating power purchase and power wheeling agreements, about financial modelling," says Andre Otto, a director of renewable energy at the department of minerals and energy.
Hermann Oelsner, a developer of the Darling wind farm, says a 115MW wind farm 30km north of Darling is on the drawing board, and another two 100MW wind farms are in the pre-feasibility stage.
Studies show that the bulk of the 10 000 gigawatt-hours identified by the government for renewable energy projects by 2013, which equates to about 1 400MW of installed renewable energy, will be generated by sugar biomass (59 percent), followed by solar water heating (23 percent), small hydroelectric schemes (10 percent), landfill gas (6 percent), pulp and paper biomass (1 percent) and wind energy (1 percent).
Wind energy comprises a small part of the initial mix because it is relatively expensive - some estimate its cost at between 40c and 50c per kilowatt-hour, against about 20c that municipalities pay Eskom for mostly coal-derived power.
But Otto points out that the more expensive options will have to be investigated in the longer term, as lower-cost options like sugar biomass reach capacity, electricity prices become more cost-reflective and renewable energy capital costs decrease with economies of scale.
"By 2013, we need a bankable business case for how we move into wind and solar," he says, agreeing with the view that an investment climate for wind energy has not been built quickly enough.
Louis van Heerden, the manager of Eskom's renewable energy programme, says the cost of wind power is significantly higher compared with building new coal stations. And while it's not the lowest-cost renewable energy resource, it is a commercially-proven technology with a short lead-time.
Rishaad Hajee, portfolio manager for resource-based industries at Wesgro, the Western Cape investment promotion agency, says major turbine manufacturers and project developers in the wind energy sector are not willing to expand into South Africa because the policy environment is not conducive.
Big turbine suppliers he met at this year's International Wind Energy Trade Fair in Germany believe South Africa is an ideal platform from which to launch wind energy into southern Africa, but are put off by an unfavourable policy environment.
"We're sending out a very bad signal to investors," he says, noting that the global wind energy market grew by 40.5 percent last year, ordering $14 billion (R97 billion) in new generating equipment. South Africa captured none of this.
The major shortcoming, he says, is that South Africa has not set prices that wind farms are paid for power to mitigate the risk associated with a new industry.
Yaw Afrane-Okese, renewable energy specialist at the National Energy Regulator of SA (Nersa), says South Africa needs to tap into the potential for wind energy, but "the only way it can happen is if we have secured financial support. Without that it's risky. Financial institutions don't know if returns are going to be made."
Under investigation are "feed-in" tariffs, or guaranteed minimum tariffs that are paid to wind farms for feeding energy into the national grid.
Nersa is waiting for the cabinet to consider recommendations from the department of minerals and energy, in consultation with treasury, about feed-in tariffs to support renewable energy policies like wind. Once a policy has been put in place, Nersa will implement it, Afrane-Okese says.
Feed-in tariffs are just one financial mechanism being considered by the government.
To close the gap between low-cost coal energy and more expensive renewable options, project developers can use tools like the Clean Development Mechanism, a credit trading system under the Kyoto Protocol that funds carbon-reduction projects in developing countries.
But the process is time-consuming and potentially expensive. It doesn't always make sense for developers of smaller projects.
A potential stumbling block for wind power and investment is uncertainty regarding South Africa's wind resources. While some data from wind monitoring stations exists, it is on the whole measured too close to the ground and is influenced by surrounding buildings.
Enter the SA Wind Energy Programme, a 45MW of wind energy project involving investment of $71 million. It will investigate how the country can build a business case for wind power as well as help co-ordinate better wind measurements and engage the government on policy, among other things, when it launches later this year.
A promising development, according to Otto, is the recent entry into South Africa of Enercon India, the Indian subsidiary of German-based Enercon, the world's second-biggest turbine supplier. It is investigating wind measurement in South Africa and is setting up an office in Cape Town.
Otto points to India as the example to follow. A few years ago, the southeast Asian nation was importing wind turbines. Today it is one of the world's five biggest suppliers. "If they can do it, we can," he says. "We have the engineering skills, all we need is the investment climate."
He is adamant that the goal is not to "run around and put up wind farms everywhere" but to create an investment climate for a sustainable wind industry.
This might be a relief to those who claim that wind farms are excessively noisy - although Oelsner says noise is not an issue with large modern wind turbines.
At Klipheuwel, although ambient noise levels have increased in the immediate vicinity of the demonstration turbines, no detectable noise influence has been measured at pre-defined measuring sites.
Hajee believes that in its attempt to get its policies right, South Africa has become "too conservative". Policies are tools that can be refined over time, he says.
Otto approaches the issue differently: "I agree we need to increase our efforts otherwise we will lose out. But we can put it up quickly and it's a mess, which will stop further wind energy and renewable energy investment. Or we can learn lessons from elsewhere in the world and do it right first time."
South Africa has so far escaped mandatory reduction targets under the Kyoto Protocol. But it is unclear whether the same leniency will be extended beyond 2012.
By then, South Africa will have hopefully learned the lessons it needs to on wind energy.