The Department of Energy (DoE) confirmed on Monday that it was considering establishing an interim Independent Systems and Market Operator (ISMO) to facilitate buying arrangements with independent power producers (IPPs) trying to enter the South African market.
The DoE deputy director-general Ompi Aphane said at that the department had invested a significant amount work in analysing the different models that could be used for the interim entity.
"A lot of the technical work has been done and the department is ready to go into a policy process. Ultimately, we would look at a more permanent structure that requires the development and promulgation of final policy structures."
The ISMO is expected to buy power arising from IPPs, the emergence of which has been constrained by several regulatory gaps, as well as the fact that Eskom, which is currently the single buyer of IPP power, is not only cash-strapped, but perceived as a conflicted participant.
Aphane said that it would not ‘break-up' Eskom to take out the system operator of the power utility, seeing that it was a light asset base unit, but emphasised that it was an important aspect when it came to regulatory and management issues.
He said at an Integrated Resource Plan (IRP2010) stakeholder meeting that South Africa was currently doing ‘"very poorly'" in reaching its target of 10 TWh of renewable energy capacity by 2013, mainly owing to the issue of not having an independent buyer of power. "Especially with Eskom having experienced significant financial woes in recent times," he added.
However, Aphane said that the DoE was confident that the situation would change, noting that a number of cogeneration contracts had already been signed.
"We have also aligned the expected renewable energy white paper with the IRP2010 deadline, that will aid us in reaching future targets. In addition, the renewable energy white paper will provide the market with more long-term renewable energy targets beyond 2013," concluded Aphane.