The South African Renewable Energy Council (SAREC), together with various independent energy bodies, has come out in strong opposition to what it calls the “blatant distortion” of facts associated with the cost of renewable power purchases.
SAREC says it believes that Eskom is being opportunistic in its attempt to mislead and deceive the public in order to serve its bid for nuclear power.
Brenda Martin, SAREC’s chairperson, says that by taking a short-term view, Eskom has deliberately distorted tariff effects, stressing that the government’s decision to invest in a renewable power purchase programme will benefit the country’s economy in the long term.
The Council for Scientific and Industrial Research (CSIR) issued a statement saying that the real value of the projects arising from the first three bid window lies in the cost reductions achieved for solar PV and wind to R0,62/kWh, which is 40% cheaper than new coal. SAREC points out that these reductions would not have been possible in the absence of the competitive bidding associated with the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
SAREC says that in addition to significant tariff decline over the past four years, renewable power plants produced roughly 6 TWh in 2016. Solar PV and wind projects, for which Eskom must still sign the power purchase agreements (PPAs), will produce 9 TWh/yr. Simply put, this shows that for Round 4 projects, the country will be paying 45% less each year for 50% more energy, compared to the projects already operational. These new renewable energy projects will therefore be almost cost neutral from a purely fuel-saving perspective.
When considering whether renewable energy has cost or benefited the South African economy should look beyond short term cost-avoidance, to long term benefit and proven cost reductions over time, says Martin. The first three bid rounds of solar PV and wind resulted in tariff payments of roughly R12-billion in 2016, the fourth round of solar PV and wind projects will trigger tariff payments of merely R6,6-billion per year, she added.
The CSIR explained (www.csir.co.za/csir-energy-centre) that only Bid Window 1 and Bid Window 2 projects of solar PV and wind were operational in 2016 (and a few Bid Window 3 projects for a few months). Projects from these renewable energy bid rounds are acknowledged to be the most expensive projects. Despite this fact, South Africa has benefited from these projects during a period of power system constraint.
It is worth noting, Martin says, that with the first three bid rounds of the REIPPP Programme, the South African government effectively made a sound investment decision into new power generation technologies, knowing that learning curves would kick in, and – as has been proven – costs would decline over time.
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