SA to subsidise green energy

Johannesburg - South Africa will start a much-delayed plan to buy electricity from green energy plants next year under a new subsidies programme to help boost private investment in renewable power, a senior official said on Monday.

South Africa is struggling to meet fast rising demand for power. State-owned utility Eskom said supply would remain tight until 2015, and especially over the next two years, until its two new power plants come on stream.

Private producers and industry have long said they could supply thousands of much-needed megawatts - either through greenfield projects or via cogeneration at their plants - but have been blocked by a lack of power purchase deals.

Renewable energy feed-in-tariffs have long been anticipated to stimulate large-scale investments, but the country has yet to sign a deal with one of the independent producers already putting money into renewable projects after the first phase of subsidies was announced in March last year.

"We are targeting the first quarter of 2011 for the release of the procurement documentation," Ompi Aphane, acting deputy director general at the energy department, told a media briefing.

The tariffs set out the price per unit of electricity to be paid for energy from renewable sources. They cover the cost of power generation and allow for a reasonable profit to tempt private developers to invest in renewable energy.

South Africa is increasingly looking towards renewable energy sources to help plug a chronic power shortage and decrease its dependence on the coal-fired power stations that provide most of its electricity.

The country expects to have 7 200 MW of electricity supplied by renewable projects over the next two decades under a new energy resource plan currently under development.

South Africa's power demand is expected to more than double from levels of about 37 000 MW by 2030.