The North Gauteng High Court on Thursday ruled against the National Union of Metalworkers of South Africa (Numsa) and civic group Transform RSA’s urgent application to stop State-owned Eskom from signing contracts with private renewable energy projects.
Numsa had asked the court to block the signing of 27 power purchase agreements (PPAs) with independent power producers (IPPs) until the court heard an application by the Coal Transporters’ Forum, which argues that a switch to renewable energy from coal-fired electricity will lead to job losses in linked sectors.
However, the court ruled that the application was not urgent and that it should be set aside.
South African Wind Energy Association (SAWEA) CEO Brenda Martin said that it was the organisation’s understanding that there was nothing in the law now preventing the signing of the PPAs.
The court’s written judgment is expected to be made available early next week.
On March 13, the Department of Energy refrained from overseeing the signing of PPAs for 27 projects that were procured under the Renewable Energy Independent Power Producer Procurement Programme in 2015, owing to the legal challenge.
The projects are anticipated to start supplying electricity into the grid about three years after the PPAs are signed, once power plants have been constructed and connected to the transmission system.
“Significant changes can occur in that time, as evidenced by South Africa’s past experience of load shedding. There is no reason to assume that the current surplus will still exist when the projects begin supplying electricity,” Martin said.
The two-year delays have had a crippling effect on IPPs, which are incurring ongoing costs in excess of R2.2-million a month, she noted.
“This translates to just under R60-million for the account of project shareholders, including community trust shareholders,” added Martin.
In addition to these direct financial impacts, the delay has resulted in rural communities not being able to realise the benefits of local economic development and construction, the incalculable cost of deteriorating investor confidence, and the effects on manufacturers, assembly plants and suppliers who have had to shut down their operations.
The loss of jobs within the renewables sector and its supply chain has been significant.
“Once the PPAs are signed, the renewable industry can begin the task of recovery and we hope to soon resume the trajectory of growth that this much-admired programme was well on track to realising back in 2015. South Africa’s renewable energy industry is ready to work with all parties committed to achieving an energy transition which is transparent and just,” she said.