Brown, department inflated renewable energy prices – DA
PUBLIC Enterprises Minister Lynne Brown and the Department of Energy were accused of exaggerating the price of renewable energy to win public support for Eskom’s contested nuclear expansion programme.
Brown told the National Assembly committee on energy the actual cost of renewable energy was R2.14/kWh, compared to 32 cents/kWh to generate coal-based power. It meant Eskom was selling renewable electricity at far below cost to the consumer, who paid about 84 cents.
The utility said it was unwilling to sign on independent power producers unless they could supply renewable energy at 77 cents/kWh or less, and the department in its presentation again conceded that the impasse was creating uncertainty in the market and affecting investor confidence.
Brown said Eskom would sign the contracts to which it committed in windows 4 and 4.5 of the renewable procurement process, but once seven steps had been implemented to address its concerns.
These include “soft support” for Eskom until new electricity tariffs came into effect next year and a review of the pace and scale of adding more renewable energy to the grid given the “hardship and oversupply” the utility was expecting until 2021.
“At the end of the seven steps we will be signing, we are committed to signing,” Brown said.
Deputy Energy Minister Thembisile Majola stressed that the department did not think Eskom should be rushed into signing more contracts with independent producers only to rue it down the line.
“We don’t want to gallop and then realise maybe we should have done things differently.” The DA’s energy spokesman, Gordon Mackay, said Brown was capitulating to Eskom and giving MPs a “sob story” to soften public sentiment towards nuclear procurement.
“Let’s not kid ourselves that Eskom’s dire state is as a result of IRPs,” he said, adding that the fault lay with Eskom for failing to take on board policy that has been on the cards since the publication of the 1998 white paper on energy.
He said the cost of renewable energy was far cheaper than the minister claimed.
“This reflects the propaganda that we saw last year by(Matshela) Koko and the former chief executive,” he added referring to Brian Molefe and his former deputy’s insistence that more nuclear power plants were needed as renewable energy was not sufficiently reliable. Mackay said he would encourage IPPs to take Eskom to court for reneging on its commitment.
Eskom is seeking tariff increases of about 20% for 2018. It contends that the need to recover the cost of renewable energy is adding some 4.9% to the price increase it needs for tariffs to be cost-related. – ANA