Solar Boom Boosts South African Salaries With 25% Jobless

Photographer: Markel Redondo/Bloomberg

The Abengoa SA solar-thermal plant near Seville, Spain. Close

The Abengoa SA solar-thermal plant near Seville, Spain.

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Photographer: Markel Redondo/Bloomberg

The Abengoa SA solar-thermal plant near Seville, Spain.

Ramone van Wyk’s wage more than quadrupled when he gave up working on sheep farms in South Africa’s arid Northern Cape province and got a job assembling a solar-thermal power plant for Abengoa SA. (ABG)

“I’ve never earned this kind of salary,” Van Wyk, 35, said in the lounge of a small two-bedroom home he shares with his parents, wife, two siblings and daughter in Pofadder, a one-hotel town near the Namibia border.

Van Wyk’s monthly wage jumped to 6,500 rand ($620) as South Africa’s largest province is transformed by President Jacob Zuma’s government energy policies. The initiative touched off the continent’s biggest boom in renewable power and is creating jobs in a country where unemployment has remained near 25 percent for the past four years.

Clean-energy developers are being lured by government incentives and about 360 day of sunshine a year. Zuma is targeting 3,725 megawatts by 2016 from the 120 billion-rand program to increase renewables, which last year accounted for less than 1 percent of the energy supply.

The program has made it the only African nation among the top 20 solar markets, with installations comparable to South Korea, Thailand and Israel, according to data compiled by Bloomberg.

South Africa generates about 85 percent of its electricity from coal. The addition of solar helps end a power shortage that in 2008 led to the closure of the country’s mines for five consecutive days. Businesses from factories to aluminum smelters currently are encouraged to cut their usage 10 percent to prevent a recurrence.

Project Investments

The Northern Cape is the location of 31 of the 64 projects so far allocated in the government’s renewables program, which covers wind, concentrated and photovoltaic solar, landfill gas and biomass power.

South Africa’s state-owned power utility has an installed capacity of 41,900 megawatts. The renewable energy built will add 8.9 percent.

“The nature of the renewable-energy investment speaks favorably to the theme of more enduring inflows into South Africa,” Goolam Ballim, chief economist at Standard Bank Group Ltd. (SBK), which has underwritten 16.8 billion rand of projects in the program and is Africa’s biggest lender, said by phone from Johannesburg.

Eskom Holdings SOC Ltd., the South African power utility, will buy the electricity from the projects for 20 years. It currently pays independent energy producers 84 cents a kilowatt-hour.

Saffron, Fish

The plants will bring economic diversity to the Northern Cape’s Bushmanland and Kalahari regions, which are home to sheep farms and vineyards that make the nation the world’s second-largest table-grape exporter and sixth-biggest raisin producer. They’re already bringing more diversity to Pofadder’s food markets, as an influx of Spaniards working for the main contractor, Seville, Spain-based Abengoa (ABG/P), spur demand for foods such as saffron and fish.

Investment in clean energy in South Africa increased more in 2012 than any other country, rising 206-fold to $5.5 billion, according to Bloomberg New Energy Finance. Solar installations may reach 187 megawatts this year and 601 megawatts in 2014, up from 7 megawatts last year.

Even with the renewables surge, 28 percent of people seeking work are jobless in Northern Cape, the third-highest unemployment rate among the nation’s nine provinces, according to Statistics South Africa data.

Van Wyk works at KaXu Solar One, a 100-megawatt solar-thermal plant about 70 kilometers (44 miles) northeast of Pofadder. The town of about 5,000 is the butt of jokes in South Africa because of its remoteness, about 916 kilometers west of Johannesburg. It’s the Afrikaans word for the puff adder, a venomous snake native to the region.

2,000 Workers

The solar project will employ an average of 950 people during construction and as many as 2,000 at peak times, Abengoa said in an e-mailed response to questions.

Abengoa also owns 40 percent of a group that was awarded Oct. 29 the 100-megawatt Xina Solar One project. It will be built next to KaXu to form Africa’s biggest solar complex, according to the company.

“I worked on a farm previously,” said Grant Parsons, 19, a crane operator at KaXu, which will cover 310 hectares (766 acres). “I get a lot more money at the solar site than on the farms. This is a big thing for Pofadder.”

About 45 percent of the workers on KaXu are South African and 20 percent are from abroad, mainly Europe, Abengoa said. There will be 36 full-time staff handling operations once it’s complete.

Rentals Jump

The work has created an accommodation shortage, said Suretha Britz, who co-owns Pofadder’s only hotel, where seven rooms have been added, raising capacity by 25 percent. At another property, she’s quadrupled the number of chalets to 20 and hired 15 people.

“Rent has jumped from around 3,500 rand to 11,000 rand a month over the last six months for a three-bedroom house,” said Annas van der Merwe, a property lawyer in the area.

Shop owners have extended hours to cater to construction workers and engineers.

“Sales volumes have increased,” said Franco Robberts, owner of the only bakery. “When the workers return to town from the solar farm at about 6 p.m. the town’s like an antheap.”

Ciabatta, Pork

Grocers are stocking new products including ciabatta bread and olive oil. The town’s only restaurant, at Britz’s Pofadder Hotel, has changed its menu.

“We can’t keep up with orders,” she said. “We opened a pizzeria because the Spaniards love pizza. We also had to adjust our menu because the Spaniards like pork, chicken and fish and we mainly serve lamb.”

The largest supermarket in town is Pofadder Saverite, a franchise of Wal-Mart Stores Inc.-controlled Massmart Holdings Ltd. (MSM) The store now stocks saffron, a spice used in Spanish cooking, Chantel van Jaarsveld, the store’s manager, said on Sept. 30.

“You feel like a foreigner in your own town,” she said. “We are thankful for that.”

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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