If anyone was in doubt that the election to the ruling African National Congress party’s top job of Cyril Ramaphosa was going to produce ‘good things’, one only need to read the recent announcement that additional renewable energy projects were back on the table for independent power producers. We take a look.
The statement on the approval of power utility Eskom’s application to purchase additional renewable energy from independent power producers was not long, nor rich in detail. And it was not even all about the REIPPP either. But it was important.
Indeed, it was a complete turn-around from the bleak, dark days of Eskom under former CEO Brian Molefe when, despite literally saving the country billions and helping prevent further rolling blackouts, independent power producers were suddenly shut out cold.
Already-signed or about-to-be-signed deals for perfectly sensible additional power production to be produced from, among others, concentrated solar power (CSP) and photovoltaic (PV) plants, were simply unilaterally cancelled.
Then, as part of President Jacob Zuma’s state capture pièce de résistance, multiple nuclear plants were being preferred instead by those in political power.
This was for the obvious reason that it’s easier to hide an illicit hand-out or side-deal in a trillion rand government-controlled project than in small, efficient and quick-build private entity-led projects.
But with Ramaphosa moving into power, the days of state capture run amok in SA’s energy sector seem to be rapidly disappearing in our collective rear-view mirror.
As we at Simply Green have been urging all along, independent power producers and others directly affected by the official dithering and nuclear option obsessing needed only to keep on keeping on for a bit, and sanity was bound to return.
Ramaphosa’s declaration, in no uncertain though still diplomatic terms, to all at the recent World Economic Forum (WEF) in Davos, Switzerland, was that nuclear would not be an option if it was unaffordable to South Africa and, at present and likely going forward well into the future, it was clearly unaffordable.
Thereby he put an emphatic end to the ‘discussion’ around the desirability of further nuclear power production capacity – there is no such desirability, except for those in positions to make illicit fortunes out of the ill-fated notion that costly and rapidly outdating technology was a ‘good’ idea.
So back to the obvious – economically-strapped but sun-rich South Africa, which along the coast also has significant untapped wind power generating capacity, should do the obvious and partner up with private sector interests with decent track records to build South Africa’s future, cost-efficient and endlessly renewable energy infrastructure.
And that’s just what has been announced.
Public Enterprises Minister Lynne Brown had approved Eskom’s application to purchase additional renewable energy from independent power producers, her department said.
There seems little doubt that that was as a result of a new ‘non-nuclear’ board at Eskom and quite probably a ‘direct order’ from her party political boss – but even if it was not, it is still the right decision in the current South African context.
‘The conclusion of the Power Purchase Agreements
(PPAs) to enable the implementation of the outstanding projects under bid windows 3.5, 4 and 4.5 of the Renewable Energy Independent Power Producers Programme (REIPPP) is critical to implementation of the national energy policy as articulated in the Integrated Resource Plan of 2010,’ said Brown in her statement.
The minister issued the statement without any apparent sense of irony, given prior pronouncements on the alleged absolutely ‘necessity’ for the nuclear option.
In January, Eskom submitted an application to Brown, under Section 54 of the Public Finances Management Act, to purchase the additional energy.
‘South Africans have reason to feel very proud of the progress the country has made adding renewable energy to the energy mix. There are risks to Eskom’s financial and operational stability in the medium term, among others, that must be mitigated. We are committed to reducing our carbon footprint,’ said Brown.
‘I have requested Eskom to work expediently to implement the decision and avoid further delays. I have also written to the ministers of energy and of finance requesting that we discuss how to address Eskom’s genuine concerns through expediting a revision of the Government Support Framework Agreement.’
She said finalising amendments to the National Energy Regulation Act would enable Eskom and National Energy Regulator (NERSA) to efficiently and effectively resolve deadlocks relating to tariffs and regulatory frameworks by including a pre-determined appeal mechanism.
The latter comment is a response at the level of the national power producer and its regulatory authority to yet another single-digit electricity tariff increase against the backdrop of requests/demands from previous Eskom boards for effective increases at or close to 20%.
Whatever is done to restore Eskom’s trashed finances, post Molefe et al, nothing could help the struggling power utility back onto its feet quicker or more efficiently than a series of rapidly-constructed (all things being relative) smaller, modular-type power production facilities under the watchful eyes of independent partners keen to make their end of the system work cost-efficiently.
With the REIPPP back on track, Eskom still faces other major challenges.
For one, the issue of distribution still hangs in the air, unresolved and slowly becoming more serious over time.
But perhaps a growing system of modularised, smaller and varied power production facilities across the country and around the coasts will help take pressure off the ageing national electricity distribution grid.
Eskom, somewhat irrationally it has to be said, insists on hanging onto its deteriorating and under-pressure distribution network, even though it has insufficient funds to properly maintain it.
Some movement on that front is inevitably necessary but, growing experience of working with private sector partners involved in REIPPP projects may help wean Eskom off its long-standing need to be not merely the biggest player on the block but the only one.