Johannesburg - Economic development offerings, instead of price, are likely to be the focal point of competition in the renewable energy procurement programme because renewable energy prices have slumped in the past nine years, Juwi Renewable Energies said on Friday.
The Council for Scientific and Industrial Research said last year that the prices for solar photovoltaic fell from R3.65 a kilowatt-hour (kW/* ) in November 2011 when the renewable energy independent power producer procurement (Reippp) programme commenced to 65cents a kW/* in November 2015. On the other hand, the price of wind power dropped from R1.51 a kW/* in 2011 to 65c a kW/* .
The Reippp programme’s scorecard for economic development includes job creation, local content, ownership, management control, procurement, enterprise development and socio-economic development.
The scorecard is heavily weighted towards job creation (25 percent) and local content (25 percent). The Reippp projects were currently awarded 70 percent on tariff and 30 percent on economic development.
Juwi, which is a subsidiary of German renewable energy group, Juwi Group, said, as a result of the massive decreases in the prices of wind and solar technologies, project owners were paying more attention to the competitive advantage of economic development targets while increasing the number of local people employed on their projects.
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Juwi managing director, Greg Austin, said as there was little difference in tariffs between bidders, the company had decided to differentiate itself by maximising economic development.
“Renewable energy has contributed massively to foreign direct investment, industrialisation and economic growth in South Africa and the current delay in awarding the next rounds of the Reippp is affecting ordinary people in local communities.
“In our most recent project, the Mulilo-Sonnedix Prieska PV3 Solar, which reached commercial operation in August 2016, the key element of our strategy that lead to Juwi being selected as the [engineering, procurement and construction] service provider for the project was due to the high level of employment of the local community in constructing this 86MW solar plant in the Northern Cape,” said Austin.
Juwi economic development and land acquisition manager, Zirk Botha, said on Friday that the company supported the government’s plans to scrap community ownership and moving this to another evaluation element. Botha said the move would lead to increased socio-economic contribution to communities. “This is a good thing. At the moment communities can only get revenue from the projects after the debt has been paid off. This is usually about 12 years,” said Botha.
As part of the Reippp programme, the successful bidders sign 20-year power purchase agreements with Eskom. Since its launch in 2011, the Reippp programme has secured nearly R200billion in new investment, according to the South African Renewable Energy Council, the body representing the renewable energy industry.
The integrated resource plan 2010 allocates 17800 MW for renewable energy generation, which includes solar photovoltaic, concentrating solar, wind, gas and hydro power generation by 2030.