Eskom sticks on price for renewables

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Head of the department's independent power producer (IPP) unit Karen Breytenbach said on Thursday, 2 February, that she was optimistic the impasse would soon be overcome.

But Eskom is insisting that unless producers are willing to reduce the prices agreed on with the department, the utility will not be able to connect them to the grid.

Eskom has refused to sign more power purchase agreements since July 2016 on the grounds that the programme costs too much, especially in the current context of an electricity supply surplus.

Breytenbach addressed the Growing Economies Energy Forum saying, "we are very close to that point where we will see change. I am fairly upbeat about the situation".

There was enough political support for the deadlock to be overcome, she said.

Breytenbach did not believe the government should proceed with its gas programme until the impasse between Eskom and the IPPs had been resolved.

She said the department was of the view that the power utility was acting against the law in refusing to sign on the renewable energy projects in the fourth bid window.

"Our law is very clear. If the minister has made a determination and [the National Energy Regulator of SA] has concurred and there was a procurement process that was run according to constitutional requirements, then Eskom must sign."

In January, the South African Renewable Energy Council said IPPs that were waiting for Eskom to sign power purchase agreements were entitled to approach the courts to force it to do so. It believed Eskom was bound by the minister's determination and that Eskom had no right to set new conditions.

But Eskom spokesman Khulu Phasiwe said Eskom would sign the outstanding 38 power purchase agreements if the prices were reduced.

Only a few of the producers had been willing to reduce the prices they had agreed with the Department of Energy.

Of the 102 that remained unsigned in 2016, 64 had been signed, though none of them had been signed on the basis of lower prices.

"We are saying to all the partners in the industry that if you are willing to sell to us at about 62c per kWh, then we will sign on without questions as that is the price we can afford. We are willing and ready to sign at 62c per kWh," he said. "If we cannot afford their prices, then I am afraid we cannot continue."

Prices of renewable energy in the expedited bid round four reached as low as 62c per kWh.

Breytenbach noted that the IPP programme had delivered millions of rand in socioeconomic development. Producers had committed a percentage of their revenue for investment in the communities where their projects were located. Millions of rand had also been invested in small business development; equity shares for blacks and communities had reached 40% and above in bid window four.

Breytenbach believed the final versions of the Integrated Resource Plan and Integrated Energy Plan could be ready by as early as June. The public consultation process will run to the end of March.

Source: Business Day