South Africa: 27 Renewable Energy Deals Signed

Image: Daily Maverick

After a delay of more than two years and a last minute intervention by labor unions Transform RSA and NUMSA, South African Minister of Energy Jeff Radebe signed 27 renewable energy independent power purchase agreements on April 4, 2017.

The projects were first introduced in 2015 as part of the South African government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), where 27 independent power producers (IPP) won a bidding round to build new wind and solar power stations.

The Eskom Debacle

In the years prior to this bidding round, national power utility Eskom had signed renewable energy deals with a total of 64 companies, some of whose plants are generating electricity today. Despite this, the company refused to sign the 27 new deals citing high cost of power purchase from the projects.

Due to Eskom having exclusive control over the transmission grid, any IPP wishing to operate a project in South Africa would have to rely on the public utility to buy its electricity.

In 2017 Eskom closed five of its outdated power plants. By the end of the year, in a statement, Eskom reinforced its position that it was uninterested in making way for the new IPPs.

New Mandate

When Jeff Radebe was appointed Minister of Energy by President Cyril Ramaphosa in February 2018, these projects were mandated as his primary focus by the new president.

The solar and wind projects are valued at R55.92 billion ($4.2 billion) in direct investment and mark a significant progression towards clean, affordable and sustainable energy in South Africa. The deals are also a significant achievement for Ramaphosa and Radebe.

“We have reached this milestone following a long period of uncertainty, not only for the renewable energy industry, but also for private sector investment in the energy sector as a whole. This has not been good for investor confidence in our country, neither for the management of the economy,” the Minister told ESI Africa.

The signing of the deals comes one month after the launch of the world’s largest oxygen production plant in South Africa’s Mpumalanga province. The new renewable energy deals will create over 6,000 jobs.

September 5-7, 2018 Cape Town International Convention Centre