May 05, 2011
Renewable energy developers say new tariffs could halt investmentsBack
Construction|Pretoria|Africa|CoAL|GreenCape Initiative|PROJECT|Projects|Renewable Energy|Renewable-Energy|Solafrica Thermal Energy|Africa|South Africa|Energy|Landfill Gas Project Developers|Maintenance|Renewable Energy|Renewable Energy Development|Renewable Energy Feed-in Tariff|Wind Energy|Davin Chown|Francois|Johannes Van Den Berg|Prabashen Govender|Thembani Bukula|The Nersa Refit Review
© Reuse this
Gathered at Nersa’s head office in Pretoria on Thursday, various company representatives indicated that the revised tariffs, which were released to the surprise of the industry in March, would render many projects, which were in advanced stages of development, unbankable.
The proposed tariffs, which were significantly lower than the 2009 tariffs, would “render the industry stillborn”, said Solafrica Thermal Energy representative Prabashen Govender.
Mainstream renewable energy South Africa MD Davin Chown emphasised the positive socio-economic and macroeconomic benefits that the Refit would deliver for South Africa, such as rural, agricultural and skills development, and said that lower Refit rates would disable project developers from delivering these.
“The revised tariffs are not adequate to seed the industry. Developers will struggle to bring projects to financial close,” said Chown, suggesting that the prices indicated by Nersa in 2009 be applied for the first procurement round until 2013.
Red Cap Investments MD Mark Tanton added that the review had created fresh uncertainty in the renewable energy market.
He agreed that a review of tariffs was necessary, and should take place. However, the decisions taken during the review process should only be applied with a three-year lag, thus decisions would be made well ahead of time and create clarity for investors.
South African Wind Energy Association (Sawea) CEO Johannes van den Berg supported this, stating that if need be, the revised tariffs could be applied from 2014, when the industry had gained more local experience with construction, operation and maintenance of renewable energy facilities.
It was, however, strongly articulated by the wind industry that the Refit was preferred over a competitive bidding process, which could create a risk that projects never became operational.
Van den Berg said that the biggest challenge currently facing the industry association was to maintain investor confidence over the next 12 to 18 months, given the slow Refit roll-out and general regulatory hurdles and costs.
GreenCape Initiative CEO Francois du Plessis said that the Nersa Refit review has created a lot of uncertainty in the market, and had turned away investors. He noted that the higher risk and uncertainty meant that investors would require higher returns, which were not forthcoming with the lower tariffs.
Tanton described the initial Refit tariffs as a beacon, and urged the regulator to once again uphold the principles of the 2009 decision.
He further noted that there were rumours within the industry that the Refit would be scrapped entirely, and bidding would take place on a lowest cost energy price for every kilowatt hour. Tanton urged Nersa to ensure that this did not happen. “Please do the industry a favour and ensure that the Refit is upheld,” he reiterated.
The Refit was viewed by renewable energy project developers as the best way to create adequate incentives to attract investors to the fledgling market in South Africa.
The roll-out of renewable energy would diversify South Africa's coal-heavy generation mix.
Nersa electricity subcommittee chairperson Thembani Bukula said that the regulator received some 200 written submissions regarding the Refit review, and would listen to 20 oral presentations on Thursday, with more scheduled for Friday.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Renewable Energy News
Recent Research Reports
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
This Week's Magazine
South Africa remains an important manufacturing and export platform for Ford Motor Company, says executive chairperson Bill Ford. However, he adds that other countries on the continent are “becoming interesting”, and that the US carmaker is casting its net wider for...
Germany’s Max-Planck-Society (MPG) and the Max-Planck-Institute for Radio Astronomy (MPlfR) are investing €11-million (about R150-million) into South Africa’s MeerKAT radio telescope array programme. The money will be used to design, build and install S-band radio...
Infrastructure spend in sub-Saharan Africa will grow from $70-billion in 2013 to $180-billion by 2025, says PwC capital projects and infrastructure Africa leader Jonathan Cawood. This is one of the findings of PwC’s Capital Projects & Infrastructure report on East...
Private-owned defence and aerospace manufacturer Paramount Group and the Ichikowitz Family Foundation unveiled its Anti-Poaching Skills and K9 Training Academy in Magaliesburg last month.
The inclusion of Bluetooth to provide sub-three meter accuracy and heightened functionality for users is one of the ways to change existing wireless networks into engagement networks. An engagement network differs from common wireless networks in that it enables the...