Johannesburg - Eskom on Friday maintained its stance that it would sign new power purchase agreements with renewable energy independent power producers (IPPs) only if these were within an “acceptable affordability range.”
This comes in the wake of President Jacob Zuma’s announcement, at Thursday’s State of the Nation Address in Parliament, that Eskom would sign the outstanding power purchase agreements for renewable energy “in line with the procured rounds.”
Eskom and the renewable energy industry have been butting heads over the power utility’s refusal to sign agreements with 37 IPPs as part of the government-driven renewable energy independent power producer programme (Reippp). According to the renewable energy industry, the refusal to sign the 37 IPPs was delaying investments worth R57 billion.
Eskom has cited the cost of renewable energy and the over supply of electricity capacity for its reluctance to commit to the 20-year power purchase agreements. When the Reippp started, Eskom had insufficient electricity capacity. But with the utility’s various power projects coming into stream in recent years, the power supply has improved significantly, resulting in current oversupply.
As a result, Eskom has started counting the costs of bringing renewable energy into the grid. The utility’s interim chief executive, Matshela Koko, has said that renewable energy cost South Africa R9 billion in 2016. Eskom is the designated buyer of the power from the renewable energy IPPs.
Support
In a move that was interpreted as a show of support for the renewable energy industry, Zuma appeared to be cracking the whip amid raging uncertainty about the programme which has resulted in investments worth approximately R200 billion since 2011, according to the South African Renewable Energy Council (Sarec).
But Eskom spokesman Khulu Phasiwe on Friday reiterated the utility’s stance that it would only commit to new agreements if these were affordable.”We will sign [the power purchase agreements] on condition that there will be no negative bearing on Eskom and the consumer,” said Phasiwe.
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He said those agitating for Eskom to commit to new agreements would also be critical when the utility asked for higher tariffs from the National Energy Regulator of South Africa (Nersa). Eskom passes through renewable energy costs to the consumer through Nersa-sanctioned tariffs.
The renewable energy industry, however, has applauded Zuma and expressed hope that his assurance would put to rest the long-standing impasse with Eskom. “Some of the serious economic effects of the recent pause in South Africa’s renewable power procurement programme such as factory closures and job losses have caused serious hardships for this fledgling industry. We trust now that there will be rapid movement to resolve the impasse,” said Sarec chairperson Brenda Martin on Friday.
The South African Photovoltaic Industry Association said it hoped that Eskom would heed Zuma’s comments and finalise the outstanding agreements.