Eskom move puts future renewables projects in S Africa at risk

South African utility Eskom may refuse to enter into new deals with independent power producers (IPPs) beyond those currently in progress, local media reported.

Such a move would put in danger the future of utility-scale renewables beyond bidding window 4.5 of the renewable energy independent power producer procurement (REIPPP). Certain coal-based IPP projects also face uncertainty, according to local media.

Eskom chairman Baldwin Ngubane told BusinessDay on Wednesday that the utility’s board had concerns about the IPP programme, and it wanted the government to analyse the implications for Eskom.

The newspaper also cited public enterprises minister Lynne Brown as saying at the Power-Gen conference that the REIPPP was reaching its limit, with major investments in grid upgrades needed if the country wants more renewable energy.

“A potential damaging outcome of current discourse is the chilling effect it could have on private sector investment – not only in RE IPP sector, but also in other parts of the economy,” the South African Photovoltaic Industry Association (SAPVIA) warned on Thursday.

The solar association raised the question why the private sector is not given the opportunity to help address the grid constraint challenge. It also said the process of establishing an Independent System and Market Operator (ISMO) should be resuscitated.

“In the interim, the transmission function within Eskom should be managed and regulated in a more transparent manner, specifically to provide confidence that the utility’s priorities in relation to the expansion of its own generation fleet do not come at the cost of the grid investments that are required for the integration of RE IPP power plants,” SAPVIA said.

Eskom’s Ngubane said on July 5 that “South Africa’s energy mix is expected to shift considerably towards renewables over the next two decades.” The firm has signed 65 power purchase agreements with IPPs for RE-IPP bid windows 1 to 4.5, which would add 4.9 GW of capacity to the grid by 2020/21, according to the statement.

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