Delay in SA’s renewable energy programme creates uncertainty

Delay in SA’s renewable energy programme creates uncertainty

The government has warned that the extended deadline of November 24 for the financial close of the third-bid-window projects in the Renewable Energy Independent Power Producer Procurement Programme may be missed.

“It’s going to be tight. There’s a slim chance which will determine whether the announcement will be made on November 24, but it is slim,” Department of Energy acting director-general Dr  Wolsey Barnard told the annual WINDaba, in Cape Town.

Barnard said the next 10 days would be critical.

“The grid access is a challenge for us, because [State-owned power utility] Eskom is going through a difficult financial stage. We need to ensure allocations are made in the budget.”

Eskom has raised concerns about the cost of connection.

Barnard later told journalists he was aware that delaying the financial closure affected the confidence of potential investors.

“We don’t want to skip dates as it creates uncertainty. We don’t want to jeopardise the programme, but with Eskom in a tight financial situation, we are waiting to see how the rescue package announced in the Medium Term Budget Framework could be used to help.”

Barnard cautioned that things were not going to get easier.

“Eskom’s financial situation is just as severe for Round 4 as for Window 3. We’re looking at how to deal with that.”

Hundreds of delegates attending the WINDaba hosted by the South African Wind Energy Association were keen to hear government’s plans for renewable energy.

Five wind farms were currently in full operation in South Africa, with 22 large-scale wind farms under construction and another 700 MW expected to be awarded soon.

Some industry players had been concerned to hear that the amount of megawatts set aside for renewable-energy projects had been reduced by about 10 000 MW.

“The situation has changed dramatically from 2010 to now, so we’ve revised our figures in terms of demand to avoid oversupply.

“The demand projection is lower because of energy efficiency initiatives, while technology is also improving,” explained Barnard, noting that low economic growth had also played into the decision.

He added that government was still keen to support small independent power producers (IPPs) in their bids. The South African and German governments had announced a special fund to help smaller IPPs bid for projects.

The WINDaba had come at a pertinent time for the energy sector, with blackouts following the collapse of a coal silo on Saturday at the Majuba power station, in Mpumalanga.

Barnard warned that Tuesday, Wednesday and Thursday this week would be particularly tight and called on South Africans to save energy and turn off every switch they could.

He said it was bad luck that it was overcast in the Northern Cape on Saturday, so they could not depend on much renewable energy.

“We lost 500 MW from solar… with the cold front having moved in from Angola.”

Solar produced 160 MW, instead of the 660 MW it could produce at full capacity, Barnard pointed out. However, he said it was a good sign that Eskom was beginning to rely on renewable energy.

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