Eskom “has no position” on the future of the Renewable Energy Independent Power Procurement Programme (REIPPP).
Eskom has been battling a backlash after it emerged that its chair, Ben Ngubane, wrote to Energy Minister Tina Joemat-Pettersson asking for discussions before Eskom gets committed to any new rounds of REIPPP projects.
This has been interpreted as an intention to stop the programme and reconsider targets for adding massive amounts of private renewable energy to the grid going forward in favour of more base load stations, particularly nuclear ones.
Two weeks ago, Eskom did meet with the department, but only to have preliminary “talks about talks”, Eskom spokesperson Khulu Phasiwe told City Press.
Another meeting was happening soon, he added.
“People are going all over the place saying that we won’t sign anything. We don’t make policy, we just give our input,” said Phasiwe.
According to Phasiwe, Eskom doesn’t have a position and will do whatever the department of energy says it should.
The REIPPP is meant to be the model for “private participation” in the turf of South Africa’s state monopolies.
It is the most important act of privatisation in the past decade and has led to private investors putting down billions to build wind and solar power plants.
The REIPPP has involved five bidding windows, the last of which was called window 4.5.
All winning bidders get a 20-year power purchase agreement with Eskom, backed by government guarantees that already total more than R200 billion.
The guarantees were crucial to making the programme work, because they make the projects automatically bankable and fundable.
Most of the approved projects are not complete and Eskom is now connecting window 3 winners.
Ngubane’s letter concerns window 5 and subsequent rounds.
“Everything up to window 4.5 is fine. All those contracts will be fine,” said Phasiwe.
According to Johan van den Berg, CEO of the SA Wind Energy Association, “there are enough wind farms fully permitted and ready to go into construction to easily oversubscribe even a large round 5”.
He calls the confusion around Eskom’s willingness to connect more renewables a “short-term development” that won’t stop renewables, and wind power in particular, from expanding in South Africa.
“We continuously engage with the department of energy and especially the REIPPP office about matters of common interest. We believe Eskom’s discomfort creates an intragovernmental misalignment that can best be resolved by government,” he said.
“We look forward to a recalibration of Eskom’s mandate that aligns with the National Development Plan, the country’s energy policy and the national best interest.”
Despite proclaiming that it is indifferent about renewables, Eskom has recently engaged in a publicity campaign to highlight the need for base load stations that generate power during peak demand periods in the morning and early evening. This is precisely when renewables do not provide much power.
According to Phasiwe, Eskom’s only concern has been that the independent power projects get approved in a way that allows it to plan well ahead for the additions to the transmission network they require.
Eskom has now reached the point where it has enough power to avoid load shedding altogether.
Finance Minister Pravin Gordhan recently pointed out at a business event that performance is relative.
“When growth is low, you have lower demand for electricity, so the levels look adequate,” he told a Nedbank-sponsored conference on investment.
“How will demand grow if we get on the right growth trajectory? Will generation cope with that?”
The same dynamic was at play with Transnet’s freight infrastructure, Gordhan said.
Eskom CEO Brian Molefe disagrees. In his latest state of the system briefing he expressly denied that lower demand was the reason Eskom was no longer load shedding or using its ruinously expensive diesel generators.
However, he compared demand in 2016 to 2015. Peak demand in both years has been at least 2 000 megawatts lower than peak demand a decade ago, before the economic crisis and Eskom’s major tariff increases led to the closure of many power-guzzling smelters.
Koeberg’s ‘leaked’ letter leaves utility tongue-tied
Eskom will neither confirm nor deny that its decision to suspend the two senior managers at its Koeberg nuclear power station last week stemmed from a seemingly routine letter to suppliers.
The suspensions were announced last week, shortly after nuclear vendor Westinghouse filed new evidence in its long-running court case against Eskom for awarding a tender to rival Areva.
The tender was for the replacement of Koeberg’s steam generators and has progressed all the way to the Constitutional Court.
The new court filing is an August 2 letter from Koeberg’s general manager, Riedewaan Bakardien, which got sent out, via email, to all Koeberg’s service providers.
This was apparently sent out by accident as the letter itself is addressed to “all KOU [Koeberg Operating Unit] staff”.
The short letter simply indicates the planned shutdown schedule for Koeberg up to 2021.
Crucially for Westinghouse, the letter indicates that there will be no shutdown before 2021 that will be long enough for the replacement of the generators for which it had tendered.
This means Eskom allegedly lied in court when it previously argued that part of the reason Areva won was the urgency of doing the replacement in 2018, argued Westinghouse.
Eskom’s statement last week said the managers were suspended for “distribution of documentation containing unauthorised facts and assumptions”.
“I can’t confirm that letter. All I’m saying is that the information relates to the tender,” said Phasiwe.
“It could be in addition to the letter, or not,” he said.
“This information was not approved by the board or the executive committee. It was circulated internally and was shared with third parties, maybe not intentionally,” he said.
For now, Eskom is not challenging Westinghouse’s application to have the Constitutional Court accept the letter as evidence.