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Eskom abusing its power, says wind industry

Oct 17 2016 20:22

Cape Town - The wind industry in South Africa is accusing Eskom of abusing its position to favour its own investment in new power plants.

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

This has resulted in the South African Wind Energy Association (SAWEA) lodging an official complaint with the National Energy Regulator of South Africa (Nersa) over what it believes is Eskom’s failure to comply with ministerial determinations.

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

“SAWEA believes that Eskom is acting in direct contravention with government’s policy to diversify the country’s energy mix,” said SAWEA CEO Johan van den Berg in a statement on Monday.

“Eskom’s current stance is incompatible with government policy, the law of the land, and its own licence conditions,” added Van den Berg.

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.

Deep concern over Eskom's stance

Members of the not-for-profit group, which include both national and international entities active in the entire wind energy supply chain, are deeply concerned by Eskom’s stance.  

"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."

SAWEA said decisions on new power generation are the sole preserve of the minister of energy, who has issued a series of determinations designed to stimulate competition, diversify the energy mix, and reduce the country’s carbon emissions.

                                                      Jeffreys Bay Wind Farm (Image supplied)

Since 2011, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has awarded 6 590 MW of renewable energy capacity to 102 independent power producers, of which at least 44 are already operational. In total the programme will attract new private sector investment worth R194bn in predominantly rural areas, stated SAWEA.

Renewables now the cheapest form of power

It also pointed out that successive capacity bidding rounds have seen tariffs fall to the point that renewables are now the cheapest form of electricity generation available to the country.

SAWEA further noted that independent research by the Council for Scientific and Industrial Research confirmed that wind and solar PV energy is, without a doubt, the lowest cost generation option for South Africa’s future.

The REIPPPP, said the group, will also lead to significant investments in social development in the communities surrounding these projects.

"Approximately R19.3bn will be ploughed into social development and a further R6bn will go into enterprise development over the twenty-year lives of the projects. Local communities will earn a further R29.2bn through their direct shareholding in the projects."

The REIPPPP also contributes to stimulating local manufacturing and job creation.

"By March 2016 over R30bn had been spent on local content and a further R65.7bn is expected to be spent by projects that have yet to commence construction. Twelve new industrial facilities have been established as a direct result of the programme. Since 2013, the construction and operation of renewable energy projects has already created 111 835 job years for South African citizens."

SAWEA said Cabinet recently recognised these accounts when it issued a statement reaffirming support for the REIPPPP. The office of the president has further stated that "all the Independent Power Producer Programmes, and any other determinations made by the Minister of Energy, are and remain government policy and are supported by the Presidency".

“Given these facts, Eskom’s refusal to sign any further power purchase agreements with renewable energy producers is quite inexplicable and clearly falls foul of the law,” said Van den Berg.

Read Fin24's top stories trending on Twitter:

eskom  |  renewable energy  |  ipps  |  wind energy
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