Johannesburg - The difference between the cost of renewable energy generated by independent power producers (IPPs) and the electricity generated by Eskom could adversely affect the utility’s balance sheet.
Public Enterprises Minister Lynne Brown yesterday told parliament that renewable energy from the Department of Energy’s Renewable Energy Independent Power Producer (Reippp) programme cost much more than Eskom’s electricity. Eskom is the designated buyer of renewable energy generated by IPPs.
Brown said Eskom had informed her that, in about 20 years, the cost of the renewable energy would be unbearable.
“It will crash the balance sheet,” Brown said.
According to Eskom, as of January, the utility had connected 62 IPP projects as part of the Reippp and Peaker Programme, adding 4200 MW of generation capacity to the grid.
But Eskom has bemoaned the cost of connecting the IPPs. This has led to a stalemate between the utility and the renewable energy industry.
Eskom said that, in the first six months of last year, it had spent R6.64 billion to purchase 3048 gigawatt hours of renewable energy at an average cost of 218 cents per kilowatt hour.
Assumptions
“We are committed to the energy mix, which includes coal, renewables, nuclear and gas. IPPs were conceived when growth was forecast above 5percent, and electricity-demand growth has decreased,” Brown said. “So the [integrated resource plan] 2010 did not materialise and price determinations made including Medupi, Kusile and IPPs [renewables, coal and gas] were made based on these assumptions.”
Brown said South Africa needed a revised energy plan to avoid surplus energy that could hurt the economy.
Brown also briefed parliamentarians on the controversial Dentons report, which dealt with irregularities at Eskom.
She said when Eskom commissioned Dentons in 2015 its survival was at stake. The utility was grappling with high operational costs, cost escalations in its build programme, security breaches and soaring primary energy costs, with diesel costs costing as much as R1 billion a month.
She said Eskom should present the report to parliament. “You should get a proper briefing.”
Read also: Eskom stalls IPP deal as costs escalate
Meanwhile, Brown said the corporatisation of Transnet National Ports Authority would pose a serious risk to Transnet’s balance sheet.
She said the collapse in the demand for commodities and the decline in export volumes had affected Transnet.
She said state-owned airline SA Express was experiencing profitability and liquidity problems and was unable to honour its debt obligations.
She said the airline was expected to pay R150 million to lenders by February 24, “failing which, the guarantee provided by government would be triggered, requiring payment within 30 business days.
“[The Department of Public Enterprises] supported (SA Express) to renegotiate with RMB and Nedbank to pay the banks’ reduced amount of R58m and the rest of instalments, based on a proposed repayment profile supported by financial projections until January 2018 to be submitted by [SA Express].”