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Phasiwe: Independent power producers not a threat to Eskom

Oct 19 2016 16:26
Adiel Ismail

Cape Town - Eskom does not see the introduction of independent power producers as a threat, the power utility said, following a complaint by wind power producers.  

"As a country, we are pushing for an energy mix that includes renewables, coal, nuclear and other sources as determined by the national policy framework," Eskom spokesperson Khulu Phasiwe told Fin24.

"All of these energy sources will be implemented at a scale and pace that the country can afford."

Phasiwe was responding to a complaint lodged with the National Energy Regulator of SA (Nersa) by the South African Wind Energy Association (SAWEA).

READ: Eskom abusing its power, says wind industry

It relates to Eskom’s refusal to enter into power purchase agreements with preferred bidders arising from government’s Renewable Energy Independent Power Produce Procurement Programme (REIPPPP).

SAWEA is accusing Eskom of abusing its position to favour its own investment in new power plants.

"Unease over Eskom’s motives leads SAWEA to believe that the state-owned utility is pushing its own agenda and opposing government’s energy policy."

The complaint details Eskom’s refusal to comply with the Electricity Regulation Act, ministerial determinations and Eskom’s own transmission licence conditions.

SAWEA CEO Johan van den Berg said the group is of the view that Eskom is acting in direct contravention to government’s policy to diversify the country’s energy mix.

“Eskom’s current stance is incompatible with government policy, the law of the land, and its own licence conditions,” he said.

Should Eskom be found guilty, SAWEA has requested that Nersa impose the maximum legislated penalty of 10% of Eskom’s annual daily turnover for each day the power utility continues to delay the programme.

Eskom’s refusal to connect the IPPs to the grid related to cost concerns and a surplus of electricity supply.

READ: Cost of new power generation in South Africa

A comparative analysis by the Council for Scientific and Industrial Research Energy Centre shows that new solar photovoltaics and onshore wind are 40% cheaper than the costs associated with new baseload coal-fired power stations and the assumed cost of new nuclear capacity.

Nersa confirmed to Fin24 that it received SAWEA's complaint on Friday last week.  

"Nersa is reviewing the complaint with the view of investigating the complaint in line with the Electricity Regulation Act," said spokesperson Charles Hlebela.

Since 2011 the REIPPPP has awarded 6 590 MW of renewable energy capacity to 102 independent power producers, of which at least 44 are already operational.

Phasiwe said Eskom supports the role IPPs play in the South African electricity market and remains committed to facilitating their entry.

"We continue to deliver on our commitment to environmental sustainability and reducing our carbon footprint with purchases of renewable energy from IPPs."

To this end, Phasiwe pointed out that in the 2015/16 financial year Eskom spent R15.4bn on procuring power from the renewable energy IPPs. This figure is up from R9.5bn in the 2014/15 financial year.

                                                      Jeffreys Bay Wind Farm (Image supplied)

Energy Minister Tina Joemat-Pettersson emphasised in a statement issued last week that South Africa’s commitments to a lower carbon and carbon resilient future have also been embedded throughout the country’s national policy framework.

"In 2010, the South African government adopted a plan to grow the share of RE in the electricity mix from 0% to 21% over the 20-year planning horizon to 2030, simultaneously reducing the capacity share of fossil fuels in the electricity mix from 86.5% to 57%. Our Renewal Energy Independent Power Producers Programme (REIPPPP) is effecting this commitment."

The minister added: “As at the end of June 2016, 6 376 MW of electricity have been procured from 102 RE Independent Power Producers in six bid rounds. Of this, 2 200 MW of electrical generation capacity from 44 IPP projects has been connected to the national grid."

Joemat-Pettersson also pointed out that while South Africa’s energy build plan still incorporates the development of fossil fuel assets in the foreseeable future, the department is committed to transition to a low-carbon economy with priority to be given to clean energy alternatives, subject to current technological and cost constraints.

Read Fin24's top stories trending on Twitter:

eskom  |  renewable energy  |  ipps  |  wind energy
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