HomeIndustry SectorsEnergy EfficiencyNatural energy resources qualify for Refit

Natural energy resources qualify for Refit

3 November 2009 – New renewable energy sources- Biomass, Biogas and three varieties of solar power technology have met the requirements for feed-in tariffs determined by NERSA (National Energy Regulator of SA).

The tariffs, known in South Africa as Refit, are set to top up earnings of independent power producers (IPPs).

Nersa announced the second phase of Refit on Friday, after approving its first round of tariffs in March. But the regulator deferred the release of a generic power purchase agreement between Eskom and renewable energy IPPs to the end of the month.

There are now nine renewable energy technologies for which feed-in tariffs have been set in South Africa.

The latest tariffs are R3.13 a kilowatt-hour for concentrating solar power trough without storage; R3.94 for grid-connected solar photovoltaic systems producing more than 1 megawatt; R1.18 for solid biomass; 96c for biogas; and R2.31 for concentrating solar power with six hours of storage.

Concentrating solar photovoltaics without storage would not be subsidised because of its high economic cost, Nersa said. An earlier draft for the second-phase Refit had proposed a feed-in tariff for this technology of R5.48 a kilowatt-hour.

Most of the tariffs set last week are in line with the initial draft, except for the price that will be offered to large producers of on-grid power from solar photovoltaics, which dropped from R4.49 a kilowatt-hour in the first proposal In March, Nersa announced feed-in tariffs for wind (R1.25 a kilowatt-hour), small hydro (94c), landfill gas (90c) and concentrated solar power trough with six hours of storage capacity (R2.10).

Technologies that have been excluded from the Refit are wave energy, tidal energy and geothermal technologies, which are currently considered to be non-commercial but may be included as costs decline.

In its reasons for its decision, Nersa on Friday projected the costs of various generation technologies over the coming two decades.

It estimated that the cost of generating electricity from coal would more than triple from 51.9c a kilowatt-hour this year to R1.66 in 2030, while the cost of power from nuclear sources would increase from 72c a kilowatt-hour to R1.76.

Meanwhile, the cheapest renewable generation technology in two decades would be landfill gas at 75c a kilowatt-hour, down from 90c currently, Nersa forecast. The next cheapest source would be biogas at nearly 87c a kilowatt-hour, against 93c currently.

Wind and biomass were projected to be the next cheapest in 2030 at about 89c a kilowatt-hour, down from R1.25 and R1.18, respectively.

The most expensive technology in 2030 would be open-cycle gas turbines at R4.23 a kilowatt-hour (R2.51 currently) followed by solar photovoltaics at R3.59 (R3.94 currently), Nersa said. Concentrating solar power costs in 2030 were projected to be R1.88 a kilowatt-hour from R3.15 at present.