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Utility Scale Renewables – Dead in the Water in SA

Promises, Promises…

  • Promises, promises, while various Ministers of Energy make teasing noises, the reality is that while the rest of the world are embracing clean energy, South Africa remains in the doldrums.
  • Since August 2015, around 38 Independent Power producers (IPP’s), have been waiting to finalise their agreements with Eskom and the Department of Energy for the implementation, build and supply of power from renewable energy projects, mainly wind and PV.

The Initial Success Story

  • Following the first successful rounds of the REIPPP’s, where around 70 projects in Wind, Solar PV and Concentrated Solar Power (CSP) were agreed and have been completed on time and in budget, the last round has hit a brick wall. The terms of the latest round have been changed, the DOE has prevaricated and Eskom have refused to sign the power purchase agreements.
  • Will the last round happen remains to be seen? There is hope that at least 26 wind projects may get the paper work completed by March 2018, at significantly lower prices paid per kWh generated than in Rounds 1 & 2. On the past track record over the last 2½ years this may prove to be living in hope rather than reality.
  • While Minister Brown has again given Eskom the go ahead (February 2018) to sign power purchase agreements, will Eskom do it, when they already have a surplus.

The Elephant in the Room – Eskom

  • The elephant in the room as usual is Eskom, and the government ministers in charge of policy.
  • From Eskom’s perspective, they do not need any more power generation. They already have a surplus, and it is increasing as the units at Medupi and Kusile come on line. Their power demands have been consistently dropping and at 2018 are back close to 2006 levels.
  • From a layman’s point of view, when you already have enough supply to meet demand, you have additional supply coming on line (which you can’t use), why would one want more supply that you have to pay for, rather than selling your own power supply?
  • Add in additional pressures from the unions, the spurious claims that jobs will be lost in the coal and transportation business, and the knowledge that you know that clean renewable energy can be contracted easily and quickly, and the best thing to do is to put the proposals in the bottom drawer until you need it.

No Sunrise on the Horizon

  • The bottom line reality for large scale renewable industry players is that there are better opportunities elsewhere in the world.
  • South Africa falls from being an exemplary example of public private partnerships for clean energy, to one of disdain.
  • With the longer-term power demand outlook being unfavourable, Eskom’s financial woes, the future for large scale renewable energy in South Africa is dire at best certainly for the next decade. Some of the latest round projects will hopefully be implemented, but anything else is likely to be no more than lip service to going green.