Analysis: Minister’s Eskom support worries IPP
Renewable energy council lashes out at Brown for defending utility’s refusal to sign agreements
THE South African Renewable Energy Council (Sarec), which represents the renewable energy industry in South Africa, said yesterday that it was worried about Public Enterprises Minister Lynne Brown’s apparent support for Eskom’s reluctance to connect additional renewable energy from independent producers.
Speaking at Eskom’s briefing on the state of the power system, Brown – Eskom’s sole shareholder representative – weighed in on the stand-off between the power utility and the renewable energy industry. She reiterated Eskom’s concerns about the cost of the renewable energy power.
She said independent power producers (IPPs) played an important role when South Africa experienced power shortages “but at a premium price”.
Sarec chairperson Brenda Martin said yesterday that the organisation was concerned about Brown’s utterances.
“We are worried about this shift. We have a government-initiated programme that is based on policy, the Energy Act, ministerial determinations and the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).
“At the end of that chain is Eskom. It is clear that Eskom must purchase the power. Eskom is now refusing to comply. The lines of accountability, duty and responsibility are clear,” Martin said.
At the centre of the impasse between Eskom and the renewable energy industry is Eskom’s refusal to sign power purchase agreements with the IPPs as part of the REIPPPP.
She said Eskom’s refusal to sign the power purchase agreements created uncertainty across the entire value chain. “Companies want to know what is happening. People have invested in this sector. I am talking about companies across the chain. I am not just talking about international companies. There are local companies across the value chain.
“It has been 20 months since Eskom was supposed to sign the power purchase agreements,” she said.
Sarec earlier this month said it had sought legal opinion, which it said confirmed that preferred bidders, who are waiting for Eskom to sign power purchase agreements, were entitled to approach a court to force Eskom to sign.
Martin said the renewable energy industry had been careful about following rules in the previous rounds of the REIPPPP.
“The power has been coming on stream – so far, 2.7 gigawatts, with investment standing at R200 billion,” she said.
However, although there was no ambiguity in the legal advice in its possession, Sarec was not keen on a legal showdown with Eskom.
“We cannot afford to add to the delay that we have already experienced. We want to resolve this issue,” she said.
But Martin confirmed that Eskom and the renewable energy industry were not currently in direct talks. She said Eskom could not negotiate existing law and policy.
She said the industry hoped that government would eventually tell Eskom “to do what they are supposed to do”.
Sarec said ministerial determinations were binding on Eskom and the power utility had no discretion to impose further conditions on preferred bidders.
Sarec has previously said tampering with the rules of the REIPPPP “at this stage” would damage confidence in the programme and the country.
At last week’s World Economic Forum meeting in Davos, Deputy President Cyril Ramaphosa spoke glowingly about the REIPPPP.
Public Enterprises Minister Lynne Brown has backed Eskom in its refusal to sign power purchase agreements.