South African Company to Import Waste Vegetable Oil to Produce Biodiesel

Another renewable energy business that could get South Africa moving towards its goals is taking shape in Richards Bay in KwaZulu Natal.

The History

After South Africa speedily set up a renewable energy strategy the focus moved to ethanol and biodiesel with the involvement of large companies including SASOL.

First to falter was ethanol, where Ethanol Africa had actually started site works for its plant in Bothaville, when government got cold feet about using maize, the staple food of the poor of South Africa, to power cars.

Later the world food crisis lead to the Food for Fuel debate and an effective halt to the promotion of biofuels from agricultural production. There were also other smaller and less legitimate operations such as a franchise scheme based on low cost imported palm oil and even algal processing that turned out to have been “demonstrated” using scum from the farm dam!

This is reflected in the feed-in tariffs for renewable energy where there is no tariff for transport fuels, biodiesel or ethanol, although that is where all the focus was initially placed. The biomass based feed-in tariffs are focussed on agricultural waste materials rather than crops.

Biodiesel From Waste Vegetable Oil

Against this background, producing biodiesel from waste vegetable oil seems like an approach to producing renewable transport fuels that could contribute to the achievement of South Africa’s renewable energy target of 10  terawatt hours by 2013 and more specifically the 2% of transport fuel set as a target in the 2008 Biofuel Strategy.

Louis Nyiri, the managing director of First In Spec (FIS) Biofuels said they will invest R1.5 billion over the next four years in three biodiesel plants processing waste vegetable oil. Two plants in Richards Bay and one in the Western Cape will supply the mining, forestry, fisheries and agricultural industries, because these sectors qualify for rebates and carbon credits when they use renewable energy and reduce carbon dioxide emissions.

At present FIS Biofuels is finalising the funding structure for the first plant to be built at Richards Bay by Desmet Ballestra. It will cost $ 45 million and it should start operating in March 2011.

The South African waste oil market is, however, not a good supplier for the business as it is small and because there is a high demand for used oil from poor communities, which inflates the price.

FIS Biofuels has already secured 15 million litres a month of waste vegetable oil, at around 0.05 $/litre below the South African price, from Canada, India and Australia.

Overview

The business will rely very strongly on the price of the waste vegetable oil, that it is able to procure in both the short and long terms. This will be related to the demand in the supplying countries as well as the transport costs which although probably advantageous at present could become and issue in the longer term.

The effect of transporting waste vegetable oil over long distances on the overall system’s sustainability and carbon footprint should be determined as should the effect of the large quantities of by products in the South African market.

This is the third in a series of posts that aim to provide information on the development of renewable energy in Sub-Saharan Africa and South Africa in particular. These are

• Big Opportunity in Renewable Energy Identified in South Africa – Start of a Series of Posts
• Lesedi Biogas to Build $15m Manure-to-Power Plant in Heidelberg, South Africa
• South African Company to Import Waste Vegetable Oil to Produce Biodiesel

Photo by jsbarrie on Flickr under a Creative Commons license.