South African state-owned power utility, Eskom, has said that it will not sign any power purchase agreements with private power producers once round 4.5 of government’s renewable power programme draws to a close.
Eskom chairman Ben Ngubane, addressed a letter to energy minister Tina Joemat-Pettersson, stating that the power company will not sign further power purchase agreements without engagement around potential risks concerning the utility’s future revenue, BDlive reported.
According to media, on Wednesday Ngubane said that the board had concerns about the independent power producers (IPP) programme, adding that government needs to examine the possible implications for the power company and its future.
Since its implementation in 2011, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has generated R195 billion ($13,731,195,700) and added 2,145MW of power onto the network.
Eskom says discussions need to be had
In response, Eskom spokesman Khulu Phasiwe said on Wednesday that the company had indicated to government that after power purchase agreements for round 4.5 were signed, it would like to enter into discussions with the Department of Energy (DoE).
“From our side, we are not going to reject independent power producers because we now have stability in the system. We have communicated that we will be signing all projects to the end of bid window 4.5. Subsequent bids will form part of our discussions,” Phasiwe said.
According to Phasiwe, only IPPs that had been signed off would receive signed purchase agreements adding that the coal IPPs, which are expected to contribute 2,500MW of power, have not been signed.
Public Enterprises amplifies voice
Despite added capacity coming on board, South African minister of public enterprises, Lynne Brown, said that South Africa’s government power development process has indicated that the system could endure a supply shortfall of 6-8GW within the next decade or more as aged plants are decommissioned or are unable to sufficiently produce.
The minister said that if additional capacity is not procured it will impact negatively on the country’s growth and development, adding that power prices would spike if these were determined by market forces, African News Agency reported.
Brown noted: “The push for increasing market influence into electricity network, especially through the mechanisms of privatisation and public-private partnerships, call for an increased introspection into the demand and supply networks, our utility and an ongoing assessment of the structure of Eskom.”