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Cape Town - The rates in the proposed tariff model for renewable energy by the National Energy Regulator (Nersa) are still too low and insufficient to attract viable projects.
This is the view of role-players in the renewable energy industry who were approached for comment.
Nersa published a discussion document on the proposed tariffs in December. The deadline for comments is Thursday, and a public debate will be held on February 5.
The plan is to announce an improved tariff model by March 9.
Frank Spencer, regional director of the renewable energy enterprise Alt-E Technologies, says tariffs are still too low for projects to be viable because the model is based on a study done in 2004.
Another criticism is that the tariffs are only applicable to large-scale projects - individuals and communities cannot participate.
Spencer reckons the model's assumptions on income that can be earned after 2012 from trading carbon credits are not justifiable, and therefore the model involves risk.
Genesis Eco-Energy, a renewable energy project developer, says the actual costs of electricity used in the model should be adjusted considerably up from the existing 35c/kWh, if one takes into account Eskom's new capital expenditure programme and the power grid's heavy dependency on fossil fuels such as coal and diesel.
Genesis Eco-Energy operations director Davin Chown also reckons the dependency on carbon credits to make the tariff model calculations tally, is an misguided approach in the light of the inherent risks of the carbon-credit market.
The so-called import tariff for renewable energy amounts to a subsidy for renewable energy generators. Renewable energy projects are not commercially viable at existing electricity tariffs, and the purpose of the import tariff is to cover the cost of generation and include a fair profit margin.
Nersa said that Eskom had been appointed as the buyer of the electricity, and would recover from its clients, through existing cost-recovery structures, the difference between its own costs of generation and the import tariff.
While Nersa's proposed tariff model will be valid for 15 years to 2023, Chown considers the tariffs should be applicable for the life of particular plant or contract for the purchase of electricity.
He says the assumptions about capital costs need to be more accurate.
Chown adds that Nersa must review the tariff model to offer investors and developers predictability, and ensure long-term stable prices for renewable energy.
The proposed import tariff for wind power is almost 64c/kWh for 2009, but Hermann Oelsner from the Darling Wind Farm responded to enquiries saying it should be more than R1/kWh to attract wind-farm investors.
For more business news in Afrikaans, go to Sake24.com
- Sake24