Lynne Brown finally approves signing of renewables deals

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Public enterprises minister Lynne Brown requested Eskom to work expediently to implement the decision and avoid further delays.
Public enterprises minister Lynne Brown requested Eskom to work expediently to implement the decision and avoid further delays.

Public Enterprises minister Lynne Brown today announced her approval of Eskom's application to purchase additional renewable energy from independent power producers (IPPs).

"The conclusion of the Power Purchase Agreements (PPAs) to enable the implementation of the outstanding projects under bid windows 3.5, 4 and 4.5 of the Renewable Energy Independent Power Producers Programme (REIPPP) is critical to implementation of the national energy policy as articulated in the Integrated Resource Plan of 2010," said Brown.

This as the power utility submitted an application to the minister under Section 54 of the Public Finances Management Act to purchase the additional energy. The minister approved the 11 January application on Friday.

Brown said South Africans ought to feel proud about progress made in adding renewable energy to the energy mix.

"There are risks to Eskom's financial and operational stability in the medium term, among others, that must be mitigated. We are committed to reducing our carbon footprint," Brown said.

This comes as a relief to SA's renewable energy sector as the signing of these deals was long overdue. The delays halted the associated R58 billion investment and the creation of 15 000 jobs at a time when the country desperately needs economic stimulus.

However, the renewables sector remained hopeful. Last month, the South African Wind Energy Association (SAWEA), together with the broader renewable power sector, said they anticipated the conclusion of the 26 outstanding PPAs in the first quarter of 2018.

Former energy minister Mmamoloko Kubayi-Ngubane in September announced that PPAs for bid windows 3.5 and 4 of the REIPPP would be signed by the end of October 2017.

"The Department of Energy, through the IPP office, will engage with all affected parties for bid window 3.5 and 4 to renegotiate not above 77 cents per kilowatt hour," Kubayi-Ngubane said at the time.

The renegotiation will assist in reducing the requirements for additional government guarantees that would impact negatively on the current economic climate and constraints in the fiscus.

On Friday, Brown requested Eskom to work expediently to implement the decision and avoid further delays.

"I have also written to the ministers of energy and finance requesting that we discuss how to address Eskom's genuine concerns through expediting a revision of the Government Support Framework Agreement."

The finalisation of amendments to the National Energy Regulation Act would enable Eskom and the National Energy Regulator of South Africa (NERSA) to efficiently and effectively resolve deadlocks relating to tariffs and regulatory frameworks by including a pre-determined appeal mechanism.

The Department of Energy launched REIPPP in 2011, which called for 3 725MW of renewable energy technologies.

Eskom is one of the six state owned companies' under the ambit of the Department of Public Enterprises.

Huge relief

Following the announcement, SAWEA says it is relieved that the 27 renewable energy projects, which include wind, solar PV and CSP should soon be able to proceed toward construction so that SA's internationally acclaimed Renewable Energy Independent Power Procurement Programme can continue to deliver on-budget renewable power along with social and economic benefits in rural areas.

"We are sure that the many rural communities surrounding prospective wind farms who have been waiting for the development benefits associated with power plant construction, and the thousands of South Africans employed by the Industry are certain to be as relieved as we are," says Brenda Martin, CEO of SAWEA.

Over the past two years, the SA renewable energy industry has operated with extensive uncertainty, the industry body says. With this final step now achieved, we hope that the country's renewable procurement programme will soon be back on track so that the many benefits to rural communities can be realised, much-needed jobs can be created, and so that investor confidence can be regained, it notes.

Minister Brown's approval is the last step in the process and all that is now required is for all affected parties to set a mutually suitable date for signing the 27 power purchase agreements, says SAWEA.

Explaining the process, Martin says: "Over the next few weeks, each party will need to ensure that their documentation is current. Once PPAs are signed, IPPs will move ahead according to their implementation agreements' timelines."

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11 Aug
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