South Africa has “no intention” of forcing renewable energy projects to renegotiate power deals, insisted the country’s energy minister as he launched a robust defence of the country’s clean power programme.
Jeff Radebe said contracts under the first two rounds of the REIPPPP procurement scheme – even though they were “relatively expensive” – were watertight, unless project owners themselves wanted to discuss refinancing options.
Radebe’s colleague Pravin Gordhan, the country’s public enterprises minister, caused uproar last week when he suggested that projects successful in the early 2011 and 2012 rounds of REIPPPP may face changes.
The South African Wind Energy Association (SAWEA) immediately warned that any changes imposed on projects would be a “a clear breach of contract and damaging to investor confidence”.
Radebe said the government has no plans to force the issue, although some projects have on their own impetus come to the Department of Energy to discuss refinancing, which could increase the term lengths of PPAs and lower the tariff.
Radebe added that the government plans to move swiftly forward with a fifth round of REIPPPP after publication of the country’s Integrated Resource Plan, which sets national goals for power infrastructure and is due to be finalised next month.
The South African renewables sector is only just recovering from a years-long hiatus that saw Eskom refuse to sign contracts awarded under Round 4, until the impasse was finally resolved by the incoming government of Cyril Ramaphosa earlier this year.
The energy minister launched a wide-ranging defence of REIPPPP, especially against charges that it is responsible for the financial woes of coal-dominated state utility Eskom.
Radebe stressed that tariff costs associated with projects awarded under REIPPPP – which has so far procured abut 6.4GW of mainly wind and solar power – are passed directly through to consumers.
He turned the focus instead on Eskom’s troubled relationship with coal, including its old retiring plants and new capacity it wants to bring online.
“Eskom’s financial problems are mostly related to the cost increases, including the increased interest during construction, associated with the delay of the new-build [coal] projects, Medupi, Kusile and Ingula,” said Radebe.