Investors and stakeholders needed urgent clarification on the policy mechanism that South Africa would use to support renewable energy, with investment worth R100-billion needed over the next five years, a Renewable Energy Africa conference heard on Wednesday.
Industrial Development Corporation (IDC) green industries head Rentia van Tonder said that despite the recent legislative uncertainty, the IDC already had renewable energy projects to the value of R14-billion over the next five years in the pipeline.
She said that given the estimate that South Africa would need a R110-billion in invsetment to meet the renewable energy capacity as envisaged in the Integrated Resource Plan, the IDC had strengthened its skills capacity in the green sector and was also looking to form partnerships with others in the know.
However, in recent months the South African government had created great uncertainty around the use of a renewable energy feed-in tariff (Refit) when it started speaking about rather using a price-linked bidding process to procure renewable energy in the country.
Also at the conference, international law firm Dewey & LeBoeuf partner Scott Brodsky said that investors had already spent about R500-million on project development on the assumption that a Refit would be used.
Answering a question about the possibility of legal action should government change to a bidding process, Brodsky said that government had set a legitimate expectation with investors that could motivate industry players to take legal steps.
He also warned that price tendering could result in investors under quoting on projects and consequently not being able to deliver on those projects.
In addition, a competitive bidding process also took more time to award, which could see South Africa taking even longer to get its renewable energy industry off the ground. The first round of bidding meant to have started in April.
“This could be a recipe for an ongoing headache for government over the years,” commented the South African National Energy Association chairperson Brian Statham.
The Department of Energy deputy director-general Ompi Aphane said last week that the procurement process for the country’s first energy projects would be launched this week.