The Department of Minerals and Energy's (DME's) Renewable energy financing and subsidy office (Refso), which was established in 2005, had secured funding for four renewable energy projects to date, DME renewable energy DG Silas Mulaudzi stated at a conference on Monday.

Refso, which has the ability to issue capital grants for renewable energy projects in South Africa, had a budget of R5,4-million in 2007, and by the end of the financial year, in March, would have underspent by about R700 000.

Despite the underspend, Helius Energy MD Paul Connolly raised the question of whether a R5,4-million budget for subsidies was enough to stimulate the uptake of renewable energy in South Africa.

The extent to which the government would seriously be driving renewable energy generating initiatives could perhaps be assessed by the amount allocated to Refso for the 2008 financial year.

Mulaudzi explained that in order to qualify for a grant from the office, which could not exceed 20% of the project's capital cost, a number of criteria had to be met.

A project should use commercially proven renewable energy technologies, and the capital cost of the project should not be more than R100-million.

The minimum project sizes were 1MW of electricity, or 914/kl/y for biodiesel, and 1 495 kl/y of bioethanol. The subsidy rates for 2007/08 were R500/kW for electricity, R273/kl/y for biodiesel, and R167/kl/y for bioethanol.

Mulaudzi confirmed that the criteria were being reviewed, as the office had received complaints regarding the caps for the subsidies.

Other criteria to be met were that the project developer should comply with the Public Finance Management Act, be 25% black-economic empowered, and should be within South African borders.

If these requirements were met, a project developer must have a completed feasibility study showing a capital cost not exceeding R100-million, should have the environmental and planning permits in place, should also have the generation or fuel manufacturing licences from the national regulator (which the DME could assist with), the project should have reached financial closure, and finally should have power purchase agreements in place. If all these requirements were met, affirmed Mulaudzi, it was likely that funding could be received within six months.

Refso said it was suffering from lack of public awareness about the subsidy programme, but hoped that companies interested in receiving grants, would visit the entity's website and register, as expression of interest were needed. A project developer would then receive a letter of registration to start the application process.