Manufacturers Express Anxiety Over Renewables Delay

Manufacturers Express Anxiety Over Renewables Delay

Manufacturers of renewable-energy inputs have called on government to urgently finalise the financial closure for the 17 projects identified as preferred bids following the third procurement round under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

It was estimated that successful closure could represent a R10-billion opportunity for the local supply industry, with the first two REIPPPP bidding rounds having facilitated investments worth about R120-billion for foreign and domestic independent power producers.

The third-round preferred bidders were identified on October 29 last year and the projects were initially scheduled to reach financial close on July 30, 2014.

However, financial close was subsequently delayed, primarily as a result of grid-connection problems and a senior Department of Energy official recently indicated that the revised deadline of the end of November might also be missed.

In a statement released through the South African Renewable Energy Council (Sarec), green-economy manufacturers warned that the viability of their facilities, together with the accompanying jobs, could be threatened unless there was finality before year-end.

DCD Business Manager Henk Schoeman, whose company has invested R300-million to set up a wind-tower manufacturing plant at Coega, in the Eastern Cape, said the delays were having adverse consequences.

“The stellar success of the programme and rapid growth in the industry has meant that we are under pressure to manage our production with extreme care to ensure we deliver to all our clients on the contractual dates, given our present capacity.

“But the present delays have extremely adverse consequences as we now have to wait with production until financial close occurs. Moreover, our future is dependent on the comfort of our clients that the programme is proceeding,” Schoeman said.

Similar distress was building, Sarec said, in the solar photovoltaic sector, where module manufacturers such as Jinko Solar, SolaireDirect and ARTsolar had collectively invested R245-million in facilities in Cape Town and Durban over the past four years. The investments had created 510 jobs.

“These companies have less than 2% of their production capacity taken up by local orders and have, as a result, been forced to seek foreign markets in the short term,” Sarec warned.

Concentrated solar power (CSP) developers were equally concerned, owing to the fact that the outcome of the CSP-only tender, which closed in March, had not yet been announced.

Speaking at a recent CSP Leadership Dialogue, European Solar Thermal Electricity Association president Dr Luis Crespo, said certainty was vital to ensuring the industrialisation, localisation, job creation spin-offs from CSP investments.

Disquiet was also expressed about the current uncertainty surrounding bid-window four, under which preferred bidders were scheduled to be named on November 24.

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