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South Africa: SAWEA challenges Eskom on PPAs

On Monday, SAWEA stated that it has lodged an official complaint with NERSA due to the national power supplier’s failure to comply with ministerial determinations.

The complaint relates to Eskom’s public refusal to enter into power purchase agreements (PPAs) with preferred bidders arising from government’s Renewable Energy Independent Power Produce Procurement Programme (REIPPPP).

SAWEA said in statement that its members are deeply concerned by Eskom’s stance.

“The industry believes that Eskom, which is by far the largest generator in the country, is abusing its position as the operator of the national grid in order to favour its own investment in new power plants,” SAWEA said in a statement.

SAWEA wants Eskom charged with 10% penalty

Should the energy regulator find Eskom guilty of the claim, SAWEA has requested that NERSA impose the maximum legislated penalty of 10% of Eskom’s annual daily turnover for each day that Eskom continues to delay the programme.

SAWEA’s CEO, Johan van den Berg, commented: “SAWEA believes that Eskom is acting in direct contravention with Government’s policy to diversify the country’s energy mix.”

Van den Berg  added: “Eskom’s current stance is incompatible with government policy, the law of the land, and its own licence conditions.”

The association highlighted that since 2011, the REIPPP programme has awarded 6,590MW of renewable energy capacity to 102 independent power producers, of which at least 44 are already operational.

In all, the programme will attract new private sector investment worth ZAR194 billion ($13,8 billion) in predominantly rural areas, SAWEA said.

Eskom limits renewables’ sale

In correspondence to ESI Africa, SAWEA’s chairman, Mark Pickering, said: “The South African wholesale electricity market is a monopoly that is operated by Eskom. It is not possible for IPPs to sell directly to clients. The rules of the renewable energy IPP procurement programme (REIPPPP) specifically limit the sale of renewable energy to Eskom.

“Without a signed PPA with Eskom, IPPs cannot raise the finance to build new power plants. Hence, Eskom’s apparent refusal to sign PPAs will prevent future investment, which will destroy the confidence that has been built up around this exciting new industry.”

Pickering added: “We [SAWEA] are obviously deeply concerned by Eskom’s apparent stance. That said, we have not seen the exact content of Eskom’s communication to the Minister of Energy. We see this as a conflict between Eskom and government, rather than with the renewables industry.

“We have therefore called on NERSA, as the independent regulator, to intervene and investigate. If Eskom is indeed failing to comply with the relevant regulations then NERSA has the power to impose a substantial fine. We trust that this will get the issues on the table and unblock the impasse,” he concluded.

Babalwa Bungane
Babalwa Bungane is the content producer for ESI Africa - Clarion Events Africa. Babalwa has been writing for the publication for over five years. She also contributes to sister publications; Smart Energy International and Power Engineering International. Babalwa is a social media enthusiast.