Kubayi to make much-anticipated renewables announcement on Friday

Energy Minister Mmamoloko Kubayi will on Friday announce the outcome of stakeholder consultations regarding the signing of long-outstanding power purchase agreements (PPAs) for renewable-energy projects procured from independent power producers (IPPs) in 2015.

The briefing, which will provide an update on progress regarding the PPA "deadlock", will take place in Pretoria at midday.

Besides offering details about the pending “IPP PPA signing ceremony”, the briefing will also address key issues of energy security, accessibility and affordability in the context of the economic recovery of the country.

“It will also reflect on the role of renewables in the broader growth of the energy sector, as well as in the context of the energy mix policy,” the Department of Energy (DoE) said in its media invitation.

Since the middle of 2016, Eskom has refused to sign PPAs for 37 utility-scale renewables projects, as well as a PPA for a concentrated solar power project procured in an earlier bid window. There has also been no progress on concluding PPAs for the small-scale renewables programme, under which several projects have also been short-listed.

The move is said to be holding back investments worth around R60-billion and preventing 13 000 construction jobs.

In addition, the impasse has damaged South Africa’s strong reputation as a favourable renewables investment destination.

Prior to the standoff, the country’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was hailed as among the best globally, having not only provided investor certainty, but having also facilitated a sharp decline in solar and wind tariffs.

During the last REIPPPP bid window, the average solar photovoltaic (PV) and onshore wind prices bid were 62c/kWh, a major fall from the 365c/kWh and the 151c/kWh bid for solar PV and onshore wind respectively in 2011.

The IPP Office, which falls under the aegis of the DoE and the National Treasury, has subsequently applied the same methodology for the procurement of baseload coal projects and is expected to release tender documents for a gas-to-power programme once the Integrated Resource Plan is updated.

The IPP Office is currently reviewing the strengths and weaknesses of the REIPPPP framework and will integrate lessons from that review into future bid documentation.