23 September 2010 – Renewable power company Solairedirect hopes to establish itself as an independent power producer (IPP) in South Africa on the back of the renewable energy feed in tariff programme by the National Energy Regulator for SA (Nersa), but some industry insiders say legislative and bureaucratic constraints are limiting the potential of IPPs in the national energy mix.
Solairedirect, which has been operational in Cape Town for 18 months, is the largest privately-owned solar power company in France, with solar parks with a total peak potential of about 30 megawatts. The company generates electricity using solar photovoltaic technology. It develops, builds and owns large solar power installations including the manufacture of solar photovoltaic (PV) modules by sister company Solairedirect Technologies.
Managing director Ryan Hammond said the company aimed to establish itself as an IPP but it was not simple. "It is more important to get it right than do it quickly," he said.
The company aimed to "unlock" the full potential of the country’s renewable energy solutions and "assist" Eskom. To this end, the company recently purchased additional manufacturing equipment, which allows it to produce roof integrated solar PV modules at its Cape Town facility.
"In May, Eskom signed two electricity power purchase agreements with IPPs as part of the medium-term power purchase programme. The signing of those deals was a significant big step for the independent power production industry and effectively signaled the start of independently generated electricity forming part of the South African energy mix," Hammond said.
Experts believe the construction sector could benefit significantly from an independent power producing industry large enough to supply power to a resurgent mining and mineral beneficiation sector.
Alexander Forbes Risk Services business unit manager Mike Lamb said recently the single biggest factor driving the construction slowdown was the lack of power and insecurity and uncertainty about future power supply.
"Removing the legislative and bureaucratic constraints currently limiting the participation of IPPs in the national energy mix would absorb significant amounts of labour and increase national power output," Hammond said it would take some time before IPPs were large enough to supply power to mining.
"It will depend on the pace of economic growth and whether Eskom is able to build at the pace required by demand," he said.
"We need to see the implementation of the renewable energy feed-in tariff system as proposed by Nersa to see renewable energy sector projects surging," Hammond said.
Last month Nersa briefed the parliamentary portfolio committee for minerals and energy on the proposed renewable energy feed tariff.