The National Energy Regulator of South Africa (Nersa) has released a consultation paper for phase-two of the renewable energy feed-in-tariff (Refit), on its website, and was requesting inputs and comment from stakeholders and the public.

The consultation paper included a lengthy draft of the power purchase agreement (PPA), which renewable energy project developers had been awaiting, before being able to get started with projects.

Stakeholder input was requested on the content, structure and risk allocation between the seller and buyer of the Refit PPA.

It was understood that the PPAs, with Eskom’s Renewable Energy Purchasing Agency as the single-buyer of power generated from renewable energy projects, would be a 20-year contract.

Potential additional renewable energy technologies, excluded from the initial Refit, were also outlined in the Refit phase-two consultation document.

A qualifying renewable energy generator under phase two of the Refit would be defined as a new investment in electricity generation using the following technologies: concentrated solar power (CSP) plant without storage; solid biomass; biogas; solar photovoltaic (PV) systems, large ground or roof-mounted; concentrating PV; concentrated solar power central tower.

Considering the market conditions, reference technology cost, and performance assumptions, Nersa, in its consultation document, outlined the levelised cost of electricity for CSP without storage as R3,132/kWh. For PV greater than 1MW the levelised cost of electricity is R4,488/kWh; solid biomass is R1,181/kWh; biogas is R0,962/kWh, concentrating PV without storage is R5,481/kWh; and CSP tower with storage is R2,308/kWh.

Wave, tidal and geothermal technologies were excluded, as Nersa said these technologies were not yet commercially available, although they could be included in later years, and considered during the yearly Refit review.

At first glance, renewable energy industry stakeholders and interested parties said that the release of the consultation paper was a long-awaited, and a good development.

"The inclusion of the new technologies is a great step forward for renewable energy in South Africa, and plugs some of the gaps from the first Refit," said Inspired Evolution executive director Chrisopher Clarke.

He added that clarity of the PPAs was progressing, and would need to be further reviewed before comment was made.

World Wide Fund for Nature Climate Change programme manager Richard Worthington said that another Refit issue that required clarity was the need for a set of procedures, and timelines to be followed by the purchasing agent, that would ensure that Eskom does not have discretion as to whether it awards a PPA or not, because it was felt that it should be a purely administrative process and not at the discretion of Eskom in any way.

Eskom as the single buyer was a major concern for some renewable energy project developers, however, it was viewed as better than developing an entirely new institution to act as the buyer, as Eskom already has the resources.

Nersa published the initial Refit guidelines on March 26 this year, and following public comments requesting the inclusion of additional technologies, said it would investigate and consider the possibility of including other technologies under the tariff, after six months.

Under the existing Refit, a wind tariff of R1,25/kWh was sanctioned, while small-scale hydro would receive 94c/kWh, landfill gas 90c/kWh and concentrated solar would receive R2,10/kWh.

Nersa said that all regulatory concepts and principles adopted in the first phase regulatory guidelines would remain unchanged and applicable to Refit phase two.

Written comments should be submitted to Nersa by August 20, which was also the closing date for interested parties to register to attend the public hearings into the Refit phase two.

The public hearings for Refit phase two were scheduled to take place in September, and the electricity sub-committee would make recommendations to the regulator in October.

Nersa approval of the Refit phase two was expected on October 29, 2009.