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Eskom's IPP move places SA on nuclear watch

Jul 21 2016 08:47
Matthew le Cordeur

Cape Town – If Eskom prevents any new power purchase agreements with Independent Power Producers (IPPs), then all eyes will focus on the contentious 9.6GW nuclear deal.

That’s the warning from RMB analyst Isaah Mhlanga on Thursday, who was reacting to a report on Thursday that Eskom will not sign any new deals with IPPs after the conclusion of the current round of renewable energy producers are concluded.

“In a letter to Energy Minister Tina Joemat-Pettersson from Eskom chairman Ben Ngubane, the utility states that it will not sign further power purchase agreements without engagement over the matter,” Business Day reported on Thursday.

Eskom’s board is concerned about the IPP programme, Ngubane told the newspaper. He said there “was a need for the government to look at all the implications for Eskom and its future”.

The Department of Energy (DoE) is aiming to have 3 725 MW generated from renewable energy sources to ensure the continued uninterrupted supply of electricity. “This 3 725 MW is broadly in accordance with the capacity allocated to Renewable Energy generation in IRP 2010-2030,” it said on its website. So far 2 145 MW is connected and this represents an investment of R195bn.

“Given the planned and pipeline of new energy coming on stream over the next five years, Eskom may be realising that it may have more than the required capacity when all the current projects are completed,” said Mhlanga on Thursday.

All eyes on nuclear

“If this is the case, it leaves us with one important question: what is the future of the government nuclear build programme?

“We do not know the answer to this, but suffice to say whatever its future is, its cost will increasingly be watched if indeed Eskom stops signing agreements with new IPPs,” said Mhlanga.

While the DoE has yet to release its request for proposals, Russian nuclear firm Rosatom told Fin24 on Wednesday that it was ready to bid and win the 9.6GW nuclear energy tender.

“We will definitely be the company that is prepared to bid… Our technology is humbly the best,” said Viktor Polikarpov, Rosatom’s regional vice-president for Sub-Saharan Africa.

Reacting to speculation that Rosatom was involved in a corrupt deal with the country, he said: “Frankly speaking, we are very upset about the speculations, which are totally groundless. This is definitely not a done deal. This is not a deal.”

Renewable Energy Council wants more airtime with Eskom CEO

In an interview with EE Publishers investigative editor Chris Yelland, the South African Renewable Energy Council said Eskom CEO Brian Molefe should engage them on a more advisory level.

“We accept that many stakeholders including Eskom have challenges in understanding the role that renewable energy plays in a modern electricity system, and we feel that the CEO of Eskom probably would benefit from an engagement with a wider group of advisors than he probably listens to at present,” they said.

“We have extended an invitation to Eskom’s CEO to meet and discuss the utility’s position on renewable energy, as we believe that through direct engagement all parties can make better informed decisions.”

It added that energy regulator Nersa needs to also play a stronger role in ensuring that the budget allocation processes are properly accounted for through its various oversight mechanisms.

rosatom  |  eskom  |  renewable energy  |  nuclear energy
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