A grouping of renewable-energy industry associations in South Africa have voiced concern over the renewable energy feed-in tariff (Refit) tariff review, stating that it could cause a “severe blow to market confidence in government’s commitment to a fixed feed-in tariff”.
It was also noted, however, that the tariff review was a preferred option compared with potential divergence to other approaches other than a Refit to stimulate the renewable energy industry.
“At this stage it is paramount that the nascent industry is provided with consistency and certainty,” said the organisations, adding that the Refit has a track record of ensuring investor security compared with other mechanisms.
On March 22, the National Energy Regulator of South Africa (Nersa) issued a consultation paper proposing a significant drop in the level of Refit when compared with those approved and promulgated in 2009.
This was days after the release of the Integrated Resource Plan 2010 (IRP2010), which signalled a greater contribution of renewable energy in South Africa's overall power generation mix.
The review raised concerns that the procurement process would be delayed and investor confidence in the process would be undermined, as well as diminishing the opportunity for the government to showcase its commitment to renewable energy at the 17th climate change Conference of the Parties to be held in Durban this year.
The South African Wind Energy Association (Sawea), the Southern Africa Solar Thermal and Electricity Association (Sastela) and the South African Photovoltaic Industry Association (Sapvia) said that they have consulted extensively with a range of government stakeholders on the current status of the Refit process to determine government's commitment to continuing with a Refit process.
"Although there has been no definitive statement made, it appears that post these engagements the majority of government stakeholders see no sense in deviating from the proposed Refit processes and that a Nersa tariff review will not derail the Refit process, but only potentially delay the planned procurement process," said Sawea chairman Mark Tanton.
The industry bodies agreed that the Nersa tariff review process must run its course and were confident that the procurement process would continue as planned after the review.
"In a recent letter sent to Energy Minister Dipuo Peters, we confirmed our industry's support for the Refit process and requested a meeting with the Minister to facilitate more dialogue between industry and government," said Sapvia acting chairperson Chris Haw.
"As industry bodies collaborating to build a successful industry, we hope to meet with the Minister in due course with a view to continued constructive dialogue between industry and government," said Sastela chairperson Pancho Ndebele.
The industry associations stated further delays would mean that South Africa would find it difficult to meet the renewable energy targets established in the IRP2010, and would further compromise the security of supply of electricity in the country.