The impasse between Eskom and the country’s renewable energy sector will soon be a thing of the past as the power utility will sign the outstanding power purchase agreements (PPAs) in the near future.
This was reportedly said by energy minister Tina Joemat-Pettersson, speaking yesterday during the economic sectors, employment and infrastructure development cluster briefing in Cape Town.
According to reports, Joemat-Pettersson said there had been engagements with Eskom, energy regulator Nersa, and the Department of Energy to iron out issues affecting the country’s independent power producer (IPP) programme.
Although Eskom has said on several occasions it will sign the deals, the renewable energy industry laments that the power utility has not signed anything yet, despite Zuma’s directive. The industry accuses Eskom of dragging its feet in the signing of these agreements since last year.
Amid the impasse, Thava Govender, group executive for transmission at Eskom, says as of January 2017, the company connected 62 IPP projects as part of the Department of Energy’s Renewable Energy Independent Power Producer (REIPP) and Peaker programmes.
He notes these 62 projects have cumulatively added 4 200MW of generation capacity to the grid. A further 620MW is expected to be added to the grid in the 2017/2018 financial year as the third bid window of REIPP projects are integrated to the national grid.
“The integration of renewable IPPs to the Eskom grid has not only contributed to the diversification of the energy mix but also to SA’s economic growth,” says Govender. He explains Eskom’s total capital expenditure costs for enabling IPP connections amount to R3.7 billion for projects in bid windows BW1 to BW4 of the REIPP procurement programme. Eskom’s total energy costs for IPPs amounted to over R18 billion up to March 2016.
“Eskom wishes to assert it remains committed to government’s energy procurement programmes and intends to sign budget quotations and power purchase agreements related to these programmes. This commitment will be carried out within a framework that takes into consideration the scale and pace of the roll-out of IPP procurement programmes, the long-term financial sustainability of Eskom and the value for money criteria vis-a-vis whether SA’s customer base can afford the current IPP tariffs and their projected trajectory. The uncertainty on the cost recovery mechanism for IPPs’ energy costs remains a key concern to be clarified with Nersa and other relevant stakeholders.”
Govender notes Eskom is processing 50 budget quotations totalling 3 381MW for the REIPP, co-generation and coal baseload programmes. “Of these, 32 budget quotations had to be revised owing to delays in the signing of related power purchase agreements. The balance of the budget quotations include new applications from recently appointed preferred bidders.”
Meanwhile, conservation group WWF South Africa yesterday launched a petition calling on Eskom to expedite the use of renewable energy in the country as part of this year’s Earth Hour campaign.
Earth Hour is an annual global event, during which people are encouraged to switch off their lights on the last Saturday in March from 8.30pm to 9.30pm local time as a symbolic gesture marking the environmental challenges facing the planet.
This year, WWF South Africa has decided to go one step further for Earth Hour by asking citizens to sign a petition addressed to Eskom, which has been stalling over the implementation of renewable energy contracts.
“In order to avoid the extreme impacts of runaway climate change, we need to reduce our carbon emissions urgently by introducing more renewable energy into the energy mix. Yet, the bulk of SA’s carbon emissions come from electricity generated by fossil fuels such as coal and oil. This has to change,” says Dr Morné du Plessis, CEO of WWF South Africa.
“We know Eskom has the power to unblock this hold-up, and thus enable all the socio-economic and environmental benefits that will result from the renewable energy programme. By signing this petition, South Africans will be calling on the utility to exercise this power for the greater good of all.”