Renewable energy calls for timeous rescue plan
State must finalise BW3 bid
MANUFACTURING companies invested in the R120 billion South African renewable energy industry yesterday called on the government to urgently finalise the financial close of bid window three (BW3) of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
They said because of the delay, fears are rising about the viability of manufacturing facilities and the accompanying jobs if finality failed to arrive before year-end.
The manufacturing companies, represented by the SA Renewable Energy Council (Sarec), also said the uncertainty about the timing of announcing the preferred bidders for BW3.5 and BW4 had also added to the discomfort.
Henk Schoeman, business manager at DCD, said his company invested R300 million to set up a tower manufacturing plant in Coega in the Eastern Cape to ensure towers for wind turbines were manufactured locally and local content of wind farms was raised. The plant employs 100 people.
He said the stellar success of the programme and rapid growth in the industry had meant that DCD was under pressure to manage its production with extreme care to ensure it delivered to all its clients on contractual dates, given its current capacity.
“If anything, the order book suggests plant expansion, 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,” said Schoeman.
In the solar photovoltaic industry a similar distress is building, said Sarec.
Photovoltaic (PV) module manufacturing companies Jim Kor Solar, Solairedirect and ARTsolar have jointly invested R245m in their facilities over the past four years and created 510 jobs, which is expected to increase to 600 by April 2015.
It said, however, that these companies had less than 2 percent of their production capacity taken up by local orders and had, as a result, been forced to seek foreign markets in the short term.
“South African PV manufacturers are competitive in sup- plying foreign markets and require at least predictability in the implementation of the REIPPPP to sustain the nascent local manufacturing industry. The same applies to SunPower, which recently announced the reopening of a PV module factory in South Africa.”
Engineering News reported that the preferred bidders were identified in October 2013 and financial close was initially scheduled for July 30, 2014, ahead of the August closing date for submissions under the fourth bid window.
However, the Department of Energy, the procurer of renewable energy bids, subsequently announced it was finalising a staggered financial close protocol, which should be concluded this month.
The department acknowledged receipt of an e-mail from Business Report on the matter but had not responded by close of business yesterday.
Eskom said it had issued all budget quotations for round three project connections.
“Funding for grid infrastructure is available for bid window 3 (BW3) projects and all BW3 projects will be connected to the grid. The Department of Energy is responsible for managing the financial closure process. Nevertheless, it is our understanding that the planned staggering of financial close is intended to spread the possible impact on the South African currency.”