Wind/solar sectors mull Eskom court bid while new energy plan delayed

January 11th, 2017, Published in Articles: EE Publishers, Articles: Energize


Minister of Energy, Tina Joemat-Pettersson

The Department of Energy (DoE) has delayed the deadline of the public consultation process regarding its draft energy plans, while the renewable sector is considering going to court to force Eskom’s hand amid the sector’s new build woes.

In November 2016, the DoE published the draft Integrated Energy Plan (IEP) and the Integrated Resource Plan (IRP) for public comments, a welcome step as the 2010 energy policy has yet to be updated.

The closing date for written comments was meant to be February 15 2017. However, the DoE has extended the public comments period to 31 March 2017 in response to requests from a number of stakeholders, the department says.

The finalised energy plan is seen as a crucial policy plan that will provide clarity for the energy industry, with the renewable, nuclear and gas sector the possible beneficiaries of new build programmes. The DoE had originally planned to have the new policy approved by Cabinet by April, but this delay will change matters.

Currently, the energy plan sees 9,6 GW of new nuclear being built by 2030. This could change once the new plan is approved. However, Eskom and state nuclear body Necsa have already started the request for information process in a bid to start the build programme.

Eskom blocks renewables, while pushing for nuclear

Over R200-billion has been invested in the renewable energy sector in the last few years, according to Finweek which quoted the Energy Research Centre at the University of Cape Town’s Jesse Burton recently.

However, with Eskom keen to get going on its nuclear programme, it shocked the renewable industry in 2016 when it refused to issue final budget quotes to preferred bidders in Round 4 and the Round 4 extension of the Renewable Energy Independent Power Producer Procurement Programme.

There are 26 preferred bidders across a range of technologies, none of which has reached financial close due to Eskom’s refusal to sign further power purchase agreements, South African Renewable Energy Council (SAREC) chairperson Brenda Martin explained. “These projects represent a combined value of R50bn in investment into the country that has been put on hold, which is ludicrous when considering our current economic climate,” she said.

SAREC is perplexed by Eskom

Speaking to Fin24 in a studio interview, Martin said she was perplexed by Eskom’s actions. “All political sentiment suggests that there is full support for this to happen, so we really are confused about why is it that Eskom is just digging its heels in,” she said, adding that the arguments cannot carry around cost or grid capacity.

Acting Eskom CEO Matshela Koko wrote on Fin24 that SAREC is “turning a blind eye to the crowding-out effect of the renewable IPP costs on the Eskom tariff”. Koko suggests that SAREC is implying that Eskom is engaged in a sustained attack on the renewable energy programme in an attempt to protect its own narrow-minded interests.

SAREC considering court action

SAREC director Mark Pickering told Fin24 in a studio interview that the renewable sector is considering two options: it can continue to talk to government, or it can go to the courts. “The legal opinions we have are very clear,” he said. “Where we go to court, we would get an enforcement order that Eskom should sign these power purchase agreements.

Pickering says however, that court action is not SAREC’s first choice of action and that the body would prefer to resolve this through dialogue and is engaging with all the key stakeholders in government and with Eskom.

There is a sense of progress, Pickering says, but it’s slow with a sense that there’s something which is difficult to talk about.

According to Pickering, Eskom has been very clear about its intentions. The power utility wants to run a nuclear programme. he says, and is hoarding whatever cash it has from its cash flows to finance a nuclear programme. Pickering suggests that a lot of pressure is also being applied on Treasury to bring it to the point of giving in to the utility’s demand to finance the nuclear programme.

This article was first published by Fin24 and is republished here with permission