Earlier this month, South Africa’s Energy Minister Jeff Radebe was prepared to sign-off the procured renewable energy Power Purchase Agreements (PPAs) with IPPs; however, NUMSA and Transform SA applied for an urgent court interdict to block the signing on the grounds of job losses for those working in coal production.
On Thursday, the court ruled against the NUMSA/Transform SA interdict application.
The South African Wind Energy Association (SAWEA) has responded to the court’s ruling, saying it awaits the court’s written judgement, which will be made available early next week. Read more: NUMSA applies for interdict to block Eskom from signing IPP contracts
“It is our understanding that there is nothing in the law that now prevents the signing of the duly procured power purchase agreements,” said Brenda Martin, SAWEA CEO.
In its legal response to NUMSA and Transform SA on Tuesday, 20th March 2018, SAWEA pointed out that planned coal-fired power station closures were unrelated to the conclusion of RE PPAs, that renewable power purchase costs did not place additional financial burden on Eskom but had in fact added to Eskom’s revenue, that the current supply surplus may well be short-lived, and that renewables are South Africa’s least-cost and most flexible power investment option.
Renewable feed power to the grid
The 27 projects are anticipated to start supplying electricity into the grid approximately three years after the PPAs are signed, once power plants have been constructed and then connected to the transmission system.
“Significant changes can occur in that time, as evidenced by South Africa’s past experience of load shedding. There is no reason to assume that the current surplus will still exist when the projects begin supplying electricity,” explained Brenda Martin, CEO of SAWEA.
The two-year delays have had a crippling effect on IPPs, which are incurring ongoing costs in excess of R2.2 million per month. “This translates to just under R60 million for the account of project shareholders, including Community Trust shareholders,” added Martin.
In addition to these direct financial impacts, SAWEA noted that the delay has resulted in rural communities not being able to realise the benefits of local economic development and construction, the incalculable cost of deteriorating investor confidence, the effects on manufacturers, assembly plants and suppliers who have had to shut down their operations.
The loss of jobs within the SA renewables sector and its supply chain has been significant, the association added.
“Once the PPAs are signed, the SA renewable industry can begin the task of recovery and we hope to soon resume the trajectory of growth that this much-admired programme was well on track to realising back in 2015.
“South Africa’s renewable energy industry is ready to work with all parties committed to achieving an energy transition which is transparent and just,” concluded Martin.