Zuma overrides Eskom's renewable energy snub

Read time 3min 40sec
Renewable energy forms an important part of SA's energy mix, says president Jacob Zuma.
Renewable energy forms an important part of SA's energy mix, says president Jacob Zuma.

President Jacob Zuma left egg on Eskom's face yesterday when he announced the power utility will sign the outstanding power purchase agreements (PPAs) with the renewable energy industry.

Zuma made the remarks when delivering the chaotic State of the Nation Address last night in Cape Town.

The comments came as a welcome relief to the renewable energy industry which has been at loggerheads with Eskom over the power utility's failure to renew PPAs with some players.

The impasse had resulted in a legal showdown brewing as independent power producers (IPPs) looked to lock horns with Eskom over its continued delays in signing new contracts. Eskom's argument in snubbing renewable energy was that investments in the projects resulted in a net loss of R9 billion to the South African economy in 2016.

In his speech, Zuma said the successful execution of Eskom's build and maintenance programmes helped ensure stability and an end to load-shedding.

"Work is continuing to ensure energy security. Renewable energy forms an important part of our energy mix, which also includes electricity generation from gas, nuclear, solar, wind, hydro and coal. Government is committed to the overall Independent Power Producers Programme and we are expanding the programme to other sources of energy, including coal and gas, in addition to renewable energy.

"Eskom will sign the outstanding power purchase agreements for renewable energy in line with the procured rounds."

The South African Renewable Energy Council (SAREC) says it is pleased to note the Presidency's clear support for the country's Renewable Energy Procurement Programme (REI4P).

The industry body says this globally recognised programme was the initiative of government, and it is fitting the policy-maker's vision can continue to be realised.

It adds the industry appreciates the expressed support key ministers have lent to the renewable energy programme during the year-long impasse with Eskom.

"Some of the serious economic effects of the recent pause in SA's renewable power procurement programme, such as factory closures and job losses, have caused serious hardship for this fledgling industry. We trust there will now be rapid movement to resolve the impasse in line with the president's directive," says SAREC chair Brenda Martin.

SAREC says the president's leadership can ensure that now the much-needed direct and indirect investment and job creation is unlocked. More than R57 billion investment will flow in the short-term and jobs will be created once outstanding power purchase agreements are signed, the industry body notes. In addition, it says, up to 15 000 jobs associated with the power procured in 2015, are currently not being realised.

It notes that through six bid windows, the REI4P secured the following successes: 102 projects have been procured; investments of R194.1 billion (of which R53.4 billion from foreign investors); and 64 projects have signed contracts representing 4 006MW capacity of which 3 051MW was online (including early operation) as at 17 January.

Another industry body, the South African Photovoltaic Industry Association (SAPVIA), says the announcement that Eskom will sign the outstanding PPAs in the renewable energy programme sends a strong message to investors that the renewable energy industry is very much open for business.

"We now hope that Eskom heeds the president's commitment to finalise these agreements and the minister moves ahead with the announcement of the expedited round," SAPVIA says in a statement.

"It is reassuring to know that government remains committed to working together with the private sector to attract investment and drive much-needed job creation in the renewable energy sector," says SAPVIA chairman Davin Chown.

"This industry has a strong track record when it comes to delivering on government's key objectives of economic growth and social development, and we look forward to building on the successes we have already had in rounds one, two and three of the REIPPP."

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