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Dec 02, 2010

IPPs keen to invest but more policy clarity needed

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Independent power producers (IPPs) are ready and willing to invest in the South African energy market, but need policy clarity from the government, to be able to invest comfortably.

South African Independent Power Producers Association (SAIPPA) representative Chikoma Kazunga said that the market demand for power was high and that new generation regulations should accommodate the willing buyer, willing seller model.

He also emphasised that clarity on the Independent Systems and Market Operator (ISMO) was required and the industry was waiting for the draft ISMO Bill.

Kazunga was speaking at the first day of the public hearings into the second integrated resource plan, or IRP 2010, which took place in Johannesburg on Thursday.

Engineering consultant for the IPP sector, Dave Long, stated that the IRP2010 needed to be more IPP, and job creation ‘friendly’.

Long stated that roll-out lower cost cogeneration technologies such as biomass and biogas should be maximised, in order to alleviate power looming shortages, as outlined in the medium-term risk mitigation plan (MTRMP).

He noted that there seemed to be a misalignment between the MTRMP, which required immediate short-term action, and the IRP2010, which took a longer-term planning view.

He added that low-cost cogeneration options should not be capped, as they could provide solutions to power shortages, while more expensive renewable technologies should be capped because they could push up the overall electricity price.

An Exxaro representative also raised concerns with the IRP2010, and put forward proposed alternatives. One of these was that the proposed 4 000 MW allocated to new-build coal from IPPs, which was scheduled to come online from 2017, should be brought forward and contribute sooner.

Long also reiterated the need for policy clarity and alignment, and added that the delays associated with numerous documentation have been going on for “far too long”.

He highlighted the delays with the pilot national cogeneration programme, the medium-term power purchase programme, the renewable energy feed-in-tariff, and the IRP2010.

He added that cogeneration feed-in-tariff regulatory rules were still required from the National Energy Regulator of South Africa (Nersa), as was clarity on the ISMO from the Department of Energy (DoE), and the operation of the Southern African Power Pool, which could potentially assist in alleviating power shortages.

ENERGY COMMISSION

Another point raised by Kazunga, was that it was felt that a permanent energy commission should be established, which would be tasked with researching future IRPs, and could draw on participation from international experts.

This point was reiterated by Smart Green Prosperity director John Joslin, who commented that the IRP2010 looked like a “slight variation of the Eskom expansion plan”, and did not deal with any issues of transmission or distribution.

The IRP2010 hearings in Johannesburg were well attended and numerous presentations were made by varying sectors of industry, as well as nongovernmental organisations.

Nersa electricity subcommittee chairperson Thembani Bukula, DoE deputy director-general for electricity, nuclear and clean energy Ompi Aphane, and DoE spokesperson Bheki Khumalo sat on the panel, which heard the presentations from the public.

The hearings would continue on Friday.

Edited by: Mariaan Webb
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