A bumper year for renewable energy

This year could be a bumper one for South Africa’s renewable energy programme as prices could drop if the sector can sort out its problems with Eskom.

After starting with a bang, South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) hit the skids in 2016 after Eskom withdrew its support.

However, Khulu Phasiwe, Eskom’s spokesperson, told City Press that the state utility was ready to sign 39 new contracts.

This will come as a relief for big renewables investors such as Mainstream Renewable Power, whose CEO is Eddie O’Connor.

“Eskom has been making noises that they are pro-nuclear and not very fond of renewables,” he said.

Industry leaders such as SA Wind Energy Association (Sawea) CEO Brenda Martin are hopeful that 2017 will iron out the difficulties of the last year. “There are indications that the government will overcome the Eskom delays,” she said.

O’Connor agreed, saying they remained convinced that the South African government was still committed to renewable energy.

This, coupled with the release at the end of last year of the draft Integrated Resource Plan (IRP), which allocates an additional 37 400 megawatts to wind energy by 2050, suggested that this short-term obstacle was a bump in the road, Martin said.

Since South Africa’s renewable programme launch in 2011, it has procured around 6.3 gigawatts of generation capacity across wind, solar photovoltaic (PV) and concentrated solar power, representing around R193 billion of private sector investment as of June 2016.

Up to now, about 2 310MW of renewables have been connected to the grid.

The latest IRP model, released last month, could present a bright future – if the model that does not limit renewables is selected.

This model states that, between 2023 and 2050, more than 50 000MW of solar PV and, between 2025 and 2050, more than 106 000MW of wind energy should be added to the grid.

Phasiwe said that, to date, Eskom has signed 64 power purchase agreements (PPAs) for a total of 4 000MW under the REIPPPP, and two PPAs for the open-cycle turbines for over 1 000MW.

He said that, in addition to the signed PPAs, there are 2 383MW of renewable PPAs remaining to be signed, made up of 39 contracts.

He said that these had been approved by the Eskom board’s investment and finance committee and the necessary approvals had been received from the minister of public enterprises.

“Furthermore, Nersa [National Energy Regulator of SA] has provided the necessary assurances for cost recovery of these power purchase agreements,” he said.

Martin said the programme’s expansion all hinged on Eskom signing the PPAs and releasing the bottleneck this delay has caused.

She said that if current allocations in the draft IRP were made policy in March 2017, it would contribute to investor confidence by laying out a clear path for wind energy until 2050.

Renewable energy pundits believe that prices will continue to drop, as indicated by research done by the CSIR.

In the REIPPPP, in just four years, the prices of onshore wind have fallen by 50%, whereas solar PV has fallen by over 75%.

O’Connor said Eskom was blocking the cheaper electricity from reaching the South African public in future.

The Energy Intensive User Group (EIUG), whose 32 members account for more than 40% of local energy consumed, said the generation from renewables was only a small fraction of the group’s demand.

“The generation from renewables is also intermittent and not suitable for the base load demand of large power users,” said spokesperson Jarredine Morris.

The group wants further investment in renewables, as well as investment in flexible back-up generation technologies such as gas, widely viewed as an ideal solution for fixing renewables’ intermittency problems.

Morris said the decreasing cost of renewables generation and the management of the grid points to a future where centralised generation stations – coal and nuclear – would be replaced by a multitude of smaller, modular renewable generators and energy storage technologies.

“SA is blessed with excellent solar and wind resources. However, the decarbonisation of the grid will be a gradual process, running over several decades,” the group said.

Nicole Löser, attorney at the Centre for Environmental Rights, and O’Connor believed that next year’s primary battle around renewable energy would be mostly political.

“This unfortunately tied up with the larger political contestation around control of state-owned enterprises,” she explained. “We may have to go to court if [Eskom’s refusal to sign PPAs is] not resolved shortly.”

O’Connor saw the problem as political and not technical.

Sawea also submitted a complaint against Eskom to the state energy regulator last month due to Eskom’s refusal to sign PPAs.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot