The South African Wind Energy Association (SAWEA), together with the broader renewable power sector, have applauded Minister Radebe’s statement that the country’s renewable procurement programme will resume.
The energy minister has set a firm date for the conclusion of duly procured power purchase agreements (PPAs): Tuesday March 13th, 2018. Read more: Outstanding PPAs to be signed next week – SA energy Minister
REIPPPP, back on track
In a statement, SAWEA said that the task of getting the REIPPPP, which has endured extended policy uncertainty for over 2 years, back on track will no doubt be a challenge for all involved.
However, the industry has reaffirmed its commitment to working with government, civil society and labour to ensure that the programme makes an optimal contribution to job creation, advancing the transformation agenda and attracting further foreign direct investment.
The recent impasse has witnessed an estimated R58 billion ($4.4 billion) of stalled investment – an estimated 13,000 construction jobs have been lost and billions of Rands of local economic development spend foregone. Read more: Renewable energy programme back in business
The wind association added that South Africa’s manufacturing and construction industries in particular, stand to benefit immediately from conclusion of the PPAs.
Adding that the recovery and growth of the domestic manufacturing industry is particularly critical, given its potential to increase investment, create jobs and drive down the price of renewable technology. Policy certainty is essential to realising continued value chain benefits, attracting investment and creating jobs.
“The industry is therefore immensely relieved to receive confirmation today [8 March, 2018] from Minister Radebe that PPAs will be signed with no further delay,” said Brenda Martin, CEO of SAWEA.
PPAs to move ahead
At the end of 2015, after three successful competitive bid rounds utility-scale renewable power projects totalling 6,376MW and amounting to investment of over R200 billion had been procured.
The estimated average portfolio cost for all technologies under the REIPPPP has dropped consistently in every period to a combined average of R0.86 /kWh by that point.
37 preferred bidders from Rounds 3.5 and 4 would normally have signed PPAs with Eskom by no later than April 2016.
Minister Radebe has advised the Office of the Director General and the IPP Office to commence with the arrangements for the signing of the 27 renewable energy projects to realise the substantial investment that will help to stimulate the country’s economy at a time that is most needed.
According to Radebe, this initiative will mobilise R56 billion of new investment in the economy over the next 2 to 3 years.
This in turn will contribute to economic growth supporting the already positive achievement of 3.1% GDP growth in the quarter four, he noted.
“In a nutshell, these projects will provide 61,600 full time jobs of which 95% is for SA citizens, mostly during plant construction specifically with a focus on youth employment. Northern Cape will have 59% of the jobs created, followed by Eastern Cape with 15% and North West 13% of jobs created.
“The Renewable Energy Programme has empowered South Africans to own on average 48% of the equity in all of the Independent Power Producers (IPPs) projects. About 25% of the project equity is owned by foreign investors acting as a catalyst by providing investment and skills transfer to the establishment of the new green economy while enhancing opportunities for economic transformation of which the outcomes could clearly be seen in Bid Windows 3.5 and 4.”