SA renewable electricity production program under threat

Eskom is slowing down SA’s renewable electricity program by not supporting the Independant Power Producers due to financial restraints.

Eskom could deal a serious blow to the growth of electricity produced by IPPs (Independent Power Producers), due to the fact that, according to ESKOM’s Juan la Grange, they cannot afford it. Renewable energy is undeniably the way of the future and globally we have realised that there is a need to decrease our dependence on limited resources such as fossil fuels to meet our energy demands. This movement towards renewables is not only good for future proofing our energy sources in years to come but is also good for the environment as a whole.

In answer to this requirement, South Africa implemented the REIPPP (Renewable Energy Independent Power Producer Procurement) Programme in 2011, which aims at incorporating private entities to invest in renewable energy projects with the intention to feed large amounts of power back into the grid. This is done via a competitive bidding mechanism, which has had three phases since its inception. The programme required potential Independent Power Producers (IPP’s) to submit a proposal containing the quotes and proposed infrastructure for the installation of a renewable energy system, which when approved, would be allowed to feed energy back into national grid. The infrastructure would be paid for by project developers, with Eskom claiming ownership once completed, at which point Eskom would enter into a Power Purchase Agreement (PPA) binding them to purchase the energy generated from these projects for the next 20 years.

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Thirty seven projects, adding around 1 860 MW to the national grid, have already begun commercial operations and provide a huge economic benefit to many rural areas. This has been rolled out in stages of bidding and Eskom has committed to projects up to Bidding Round 3. Further expansion of this programme has however been halted by Eskom’s board decision to no longer commit to any further projects, despite the acceptance of numerous proposals from Bidding Round 4 already underway. Eskom claims that due to financial liquidity concerns, they will not be able to commit to further projects. Some people feel that this is an attempt by Eskom to prevent the conclusion of PPA’s, removing their financial obligation in the event of these projects have been completed. NERSA has claimed it is a result of Eskoms inability to properly maintain their coal fired power stations.

Whatever the reason, we know that this greatly jeopardises the potential for renewable energy to grow on a large scale and increases our dependence on Eskom to finance coal and nuclear power stations in an attempt to meet our increasing energy demands. It seems Eskom will be relying more and more on the construction of nuclear power stations, of which there hopes to be 6 new units built by 2030 (South African currently only has 2 reactors supplying around 5% of the power to the national grid). Nuclear power in itself is very controversial, with a number of arguments for and against it and only time will tell as to whether this will be the best option or whether the REIPPP projects will be explored again going forward.



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SA renewable electricity production program under threat

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