Industry seeks clarity on renewable energy drive

Admire Moyo
By Admire Moyo
Johannesburg, 17 Feb 2020

The renewable energy industry in SA is asking for clear timelines for the signing of power purchase agreements (PPAs) to kick-start increased power generation.

This as the industry welcomed president Cyril Ramaphosa’s support of renewable energy as an answer to SA’s energy supply challenges.

Ramaphosa made the remarks during his State of the Nation Address (SONA) last week. In order to “rapidly and significantly increase generation capacity outside of Eskom”, he said a Section 34 ministerial determination will be issued shortly to give effect to the Integrated Resource Plan 2019, enabling the development of additional grid capacity from renewable energy, natural gas, hydro power, battery storage and coal.

However, Business Day reports that mineral resources and energy minister Gwede Mantashe has reiterated government will not be rushed into opening a new bid window for renewable energy, notwithstanding the undertaking made by Ramaphosa in his SONA.

It says while Ramaphosa said specifically that government would open bid window five of the Renewable Energy Power Producer Programme, Mantashe said he could not commit to a time frame and was not a "fundamentalist" about bid window five.

Policy certainty

Industry body, the South African Wind Energy Association (SAWEA), celebrated Ramaphosa’s firm commitment to SA’s renewable energy procurement programme (REI4P) as stated in his SONA.

SAWEA says policy certainty and transparent decision-making cannot be overstated as the value of the leadership will drive the return of investor confidence, both foreign and domestic. It points out the president has actively prioritised regaining investor confidence and specifically set an investment growth target of R1 trillion over the next five years, which the REI4P will help deliver.

“The industry is immensely relieved to receive such strong support from the president, who acknowledged the key role the country’s renewable industry has to play in delivering power,” says Ntombifuthi Ntuli, CEO of SAWEA.

However, SAWEA has asked for clarity on the planned sequence, to ensure momentum is not lost.

“We now await the promised ministerial determination and a clear timeline to kick-start increased renewable power generation,” adds Ntuli.

She says as stated by the president, the Section 34 ministerial determination will give effect to the Integrated Resource Plan 2019, enabling the development of additional grid capacity from renewable energy, but it is only the first step in delivering new power into the grid.

“Thereafter, the industry will wait for a request for proposals (bid window five of the REI4P); the announcement of a preferred bidders; and financial closure period (which takes about 12 months), before the power purchase agreements are signed. Thereafter, construction can commence, with new projects reaching commercial operation date within 18 to 24 months.”

SAWEA notes that in addition to driving REI4P by opening bid window five, it has been announced that the Department of Mineral Resources and Energy will work with energy producers to accelerate the completion of window four projects which are expected to start coming on stream during 2020.

Additionally, it says, short-term measures will go a long way to help alleviate economic pressure brought on by the current shortage.

Emergency power

Government is expected to initiate the procurement of emergency power, following the recent request for information, to which the wind industry submitted a large number of proposals, the organisation says.

The industry association says it is also appreciative of the fact that government has listened to its call to lift the maximum export capacity on operating wind farms, which caps the amount of energy operational renewable energy projects can export into the grid.

“We are pleased government is committing to negotiate supplementary PPAs to acquire this additional capacity for existing wind and solar projects” Ntuli says.

SAWEA has called the announcement that municipalities will be allowed to procure their own power from independent power producers a game-changer, and welcomes the decision government has taken to relook at how energy is supplied in South Africa, as the current supply system needs to evolve and adapt.

“To shift away from a centralised monopoly to a more efficient decentralised generation model will increase competition and drive down energy prices, which will ultimately stimulate the economy and support the growth that South Africa is seeking,” says Ntuli.

Only viable option

Meanwhile, COO of South African Photovoltaic Industry Association (SAPVIA), Niveshen Govender, weighed in on Ramaphosa’s SONA.

“We are glad the energy crisis has been prioritised by the president as the first order of business at SONA.

“Given the economic climate, we are confident renewable energy is the only viable option with regards to cost and execution specifically, and we expect the results of the Independent Power Producer Office’s request for information will show the same.

Govender adds the solar industry is ready and waiting for the section 34 determination and future rounds of the REIPPPP. “We continue to support and encourage meaningful local participation in the REIPPPP.”

SAPVIA says section 34 of the Electricity Regulation Act 4 of 2006 empowers the minister of energy to allow municipalities to bypass Eskom and procure electricity directly from IPPs.

“As highlighted in the SONA, SAPVIA also believes small-scale embedded generation is the biggest opportunity South Africa has for security of and access to energy, employment, skills development and rural electrification. We also welcome the removal of a limit for own consumption and the ability of municipalities to procure their own energy from IPPs.

“SAPVIA will continue to further engage with the Presidency, Department of Mineral Resources and Energy and the National Energy Regulator of South Africa on the most optimal way forward with well-defined legislation and concise, clear processes to allow deployment of generation to be as rapid as possible,” Govender concludes.