Power utility Eskom has launched the Renewable Energy Tariff pilot programme, aimed at assisting businesses that have corporate renewable energy commitments.
In a statement today, Eskom says this initiative enables organisations to source a blended electricity supply, with up to 100% of their electricity from one of the utility’s renewable sources.
Today's announcement comes after the power utility yesterday revealed its results for the financial year ended March 2021.
Eskom’s performance during the period was challenging under difficult circumstances, says the state-owned company.
The power utility reduced its gross debt by R81.9 billion, a 16.9% reduction, to an outstanding debt of R401.8 billion. The organisation’s debt remained unsustainable, attracting a net finance cost of R31.5 billion, turning an operating profit of R5.8 billion into a loss of R18.9 billion after tax, the company says.
The Renewable Energy Tariff pilot programme gives organisations a mechanism to achieve their renewable energy commitments to purchase this energy from Eskom, without the initial capital investment of having to own a renewable energy generator, or entering into long-term power purchase agreements.
According to the company, this offer allows organisations to have a 24-hour blended renewable supply to their facility, and allows them flexibility to relocate premises without needing to move renewable energy assets.
Short-term power purchases
Eskom generates green power from some of its renewable electricity plants, such as the Sere Wind Farm and run-of-river hydro facilities.
It notes the Renewable Energy Tariff pilot programme is initially limited to renewable electricity generated from the Sere Wind Farm and only available to Eskom’s customers.
During the period of the pilot programme, Eskom offers a maximum of 300GWh per annum to customers supplied directly by Eskom, on a first-come-first-served basis, it notes.
Monde Bala, group executive of Eskom Distribution Division, explains: “The Renewable Energy Tariff is designed to provide a cost-effective and flexible option for Eskom customers to consume renewable power.
“It further provides flexible, convenient and short-term power purchases for when you move your facilities. It will be available to Eskom-supplied customers whose electricity accounts are up to date.”
Bala says the tariff will be available to Eskom business customers that have green targets and would like to use renewable power in their facility or production processes.
All participating customers will have an option to select any percentage of their current electricity usage to be green, says the parastatal.
It notes the Renewable Energy Tariff can also supplement wheeled electricity from a third-party, or own renewable electricity generated on site to help customers achieve their clean energy target.
The tariff is designed as a declining block tariff, says Eskom, noting this means the more green energy a customer purchases (as a percentage of total consumption), the lower the rate. More details of the tariff pilot is available from the Eskom website.
Eskom customers, therefore, have an option to select an affordable contract, which is charged monthly, based on the percentage of renewable energy they consume, and this percentage will be charged monthly as specified in the contract.
At the end of 12 consecutive months, Eskom will evaluate the amount of renewable energy in kWh consumed against the contracted percentage, and if the actual capacity is less than the contracted capacity, Eskom will adjust the Renewable Energy Tariff based on the actual percentage.
The renewable energy charge payable by the customer will be adjusted accordingly. The customer’s next electricity account will be adjusted to reflect the difference.
Eskom’s Renewable Energy Tariff pilot programme will last for a two-year period ending 31 March 2023, after which the company will make a decision whether to take the tariff for formal approval.
Unprecedented decline in sales
In its results yesterday, Eskom said it achieved operational cost savings of R14.4 billion during the year under review, against a target of R14.1 billion.
Although sales volumes were down, primary energy costs increased 3.4% to R115.9 billion. Normalised operating costs increased 1.6%.
“Just like the overwhelming majority of South African businesses, Eskom was not spared the worst effects of the COVID-19 pandemic,” says André de Ruyter, Eskom Group chief executive.
“The slowdown of economic activity due to the pandemic led to an unprecedented decline in sales, which fell 6.7% from the previous year. Sadly, the losses Eskom suffered as a result of the COVID-19 pandemic were not limited to our finances.
“We also lost 153 of our colleagues to the pandemic, including 17 contractors, as at Friday, 27 August 2021. Our sincere condolences go to the affected families,” says De Ruyter.
“Operationally, however, every crisis does bring with it an opportunity. In this case, Eskom used unfortunate lower demand presented by the lockdown to conduct much-needed maintenance at some of our power stations.”
Revenue increased to R204.3 billion during the year, from R199.5 billion the previous year. This is mainly attributed to an 8.76% annual increase in the electricity tariff during the period, offset by a reduction of 6.7% in sales volume.
Primary energy costs increased by R3.8 billion, mainly as a result of an increase of R3.1 billion in renewable IPPs due to an increased production from these IPPs, the state-owned company says.
The energy availability factor deteriorated to 64.19% from 66.64% the previous year. This is a direct consequence of the implementation of the reliability maintenance programme, necessitating more planned maintenance, it explains.
Giving an overview of the organisation’s performance, De Ruyter says Eskom’s long-term objectives of achieving operational and financial sustainability are dependent on the successful implementation of the turnaround plan currently under way.
“The turnaround plan, which is overseen by a diverse executive committee, comprising 56% black female representation, focuses on operations recovery, improving the income statement, strengthening the balance sheet, driving business separation and bringing about a winning, can-do culture,” says De Ruyter.
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