The South African Renewable Energy Council (SAREC), together with various independent energy bodies, has come out in strong opposition to the blatant distortion of facts associated with the cost of renewable power purchases. It is believed that Eskom is, without a doubt, being opportunistic in its attempt to mislead and deceive the public, to serve its bid for nuclear power.
“By taking a short-term view, Eskom have deliberately distortedtariff effects. Government’s decision to invest in a Renewable power purchase programme stands to benefit the country’s economy in the long term,” said Brenda Martin, Chair of the South African Renewable Energy Council.
The Council for Scientific and Industrial Research (CSIR) issued a statement, 11 January 2017, saying that the real value of the projects arising from the first three bid window lies in the cost reductions achieved for solar PV and wind to 62c/kWh, which is 40% cheaper than new coal. These reductions would not have been possible in the absence of the competitive bidding associated with the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
In addition to significant tariff decline over the past 4 years, in 2016, renewable power plants produced roughly 6 TWh. The entire bid window four solar PV and wind projects, for which Eskom’s signature under the PPAs is outstanding, will produce 9 TWh/yr. Simply put, this shows that for Round 4 projects, the country will be paying 45% less each year for 50% more energy,compared to the projects already operational. These new Renewable power projects will therefore be almost cost neutral from a purely fuel-saving perspective.
“Any consideration of whether Renewable power has cost or benefited the South African economy should look beyond short term cost-avoidance, to long term benefit and proven cost reductions over time. For example, while the first three Bid rounds of solar PV and wind have resulted in tariff payments of roughly R12 billion in 2016, the fourth round of solar PV and wind projects will trigger tariff payments of merely R6.6 billion per year”, added Martin.
As the CSIR has explained only Bid Window 1 and Bid Window 2 projects of solar PV and wind were operational in 2016 (and a few Bid Window 3 projects for a few months). Projects from these Renewable energy bid rounds are acknowledged as by far the most expensive projects. Despite this fact, South Africa has benefited from these projects during a period of power system constraint.
It is worth noting that with the first three bid rounds of the REIPPP Programme, the South African government effectively made a sound investment decision into new power generation technologies, knowing that learning curves would kick in, and – as has been proven – costs would decline over time.
SAREC hopes that Eskom will sign all outstanding Renewable power purchase agreements as a priority. Doing so will ensure that South Africa is able to realise the benefits of the sound investment decisions made by government in 2011.