SAREC Expresses Disappointment Over Renewables PPA Impasse

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The South African Renewable Energy Council (SAREC) has expressed their disappointment over the Department of Energy and Eskom’s failure to provide any certainty for investors during yesterday’s update to parliament on Eskom’s failure to sign Power Purchase Agreements with Independent Power Producers.

The inter-governmental task team has instead proposed further delays to the end of August if not to February 2018 – posing serious threats to the local renewables industry.

SAREC highlights industry impact

The energy council highlighted in a statement that emerging markets are enduring the most impact of the R58 billion ($4.4 billion) stalled investment – an estimated 13,000 construction jobs have been lost and billions of Rands of local economic development spend foregone.

Before the renewable energy programme halted in 2015, it was trumpeted as a resounding success by both government and Eskom.

SAREC noted that bid tariffs had tumbled to the point where renewable energy has become the cheapest option for new generation capacity available to the country.

Renewable plants are majority owned by South Africans and are typically built in rural areas where they bring unprecedented benefits to poor communities.

SAREC chair Brenda Martin explained: “The industry had already attracted a substantial eco-system of service industries and was beginning to leverage investment in heavy up-stream fabrication industries.”

Eskom’s apparent objections to signing agreements with preferred renewable bidders ignore these broad benefits and instead focus the utility’s selfish interests, SAREC noted.

This from an entity that, over the past decade, has managed to stall economic growth through load shedding, waste tens of billions of Rands on its’ new-build programme, yet further billions of Rands on non-transparent coal procurement, and to top it all, quadrupled its’ retail tariffs.

Renewables proves a successful industry

By comparison the renewables industry has met and generally exceeded all policy objectives set by government.

“Very importantly we have exceeded employment targets by 27%. More than 98% of renewable projects have been delivered on time. Any cost over-runs have been for the account of investors’ rather than consumers. And all BEE and community ownership targets have been met,” SAREC added.

Should government wish to increase any of these economic development targets in future rounds, the renewable energy industry would welcome a discussion. However, it is clearly not feasible to shift the goal posts for bidding consortia that have already been awarded permits on the basis of the current bid rules.

Continuation of the renewables programme will deliver all the developmental objectives required by government; continued delays will achieve the opposite.

Martin concluded: “We call on the government to hold Eskom and the task team to account for the commitments made in parliament today, namely for final recommendations to be delivered to ministers by the end of June, and for all outstanding ‘interventions’ to be dealt with ‘by August 2017’.

“Investors are watching this space with deep concern.

Source: ESI-Africa

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