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Sep 03, 2009

Renewable energy industry players make Refit submissions to Nersa

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The public hearings for the second phase of the renewable energy feed-in-tariff (Refit) took place at the National Energy Regulator of South Africa's (Nersa's) office in Pretoria on Thursday, with 19 presenters from industry lined up to make presentations to the Nersa panel.

Nersa hearings chairperson Thembani Bukula told Engineering News Online that over 72 written comments were submitted to the regulator after it released the draft Refit 2 for comment in July.

In the draft consultation paper, 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 1 MW 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.

Considering some of the presentations, Clean Energy Solutions MD Stuart Fredman urged Nersa to include CSP power tower without storage, and also wanted clarification regarding the concept of six hours of storage. He was averse to the idea of using only molten salt in CSP plants, and suggested investigating use of methane, which he said could be easily implemented and managed.

On the other hand, representing civil society, Earthlife Africa energy principal Tristen Taylor said his organisation felt that CSP should be excluded from the Refit 2, as the tariff was simply too high.

With regard to PV systems, Fredman felt that the Refit should include a range of additional scales, and different thresholds. He said that Nersa should include smaller PV systems, and should include deep rural communities, which could use PV systems for generation needs, but would need battery storage capacity, and would likely not feed energy back to the grid. This would be a way of extending electrical energy to those communities experiencing electricity poverty in unconnected communities.

L&D Enterprises consultant Clive Mallen, whose company has an interest in manufacturing and installing solar PV panels, said that a 3-km2 solar farm in South Africa could produce about 1 800 MW/h. He said the industry would like to see government linked contracts for solar farms, and also suggested the idea of establishing private utility companies.

"Eskom already has enough on its plate," he said, adding that these private utility companies could have small producers as members, and the utility would then provide this power on to Eskom.

South African Wind Energy Association representative David Nicol questioned why the regulator would distinguish between different solar technologies, when it was not doing the same for wind energy technologies.

"In trying to support too many technologies at the start, we wont reach the critical mass in the renewable energy industry required to meet the 2013 targets," Nicol added. He further proposed that the Refit should include a target of 3 000 MW to be produced by wind, as this would be the least cost option to reach the 2013 target, and grid studies have proven this possible.

POWER PURCHASE AGREEMENTS CONCERNS

Fredman said that the renewable energy industry was waiting for action on the power purchase agreement (PPA), and highlighted that implementation of projects was being stymied by hurdles being put up by bureaucratic institutions.

Nicol emphasised that by definition, a Refit was not a tender process, and thus renewable energy project developers needed to be assured that if they met the criteria, they should be awarded a PPA.

Numerous concerns arose that the awarding of PPAs would become a type of tender or bidding process, where it was of utmost importance for developers that if they met specific criteria, they would be assured the Single Buyers Office (SBO) would procure the power they produced.

Sappi electricity systems representative Guy Spindler said that the location of the SBO, within Eskom, was a conflict of interest. He also noted that it would be impossible to create a PPA that was suitable for all players, and thus the regulator should be more flexible.

Deputy chairperson of the Energy Intensive Users Group, Dave Long, also said that the PPA in its current form was inappropriate, and needed to be "fixed", particularly concerning the issues of long-term pricing and risk allocation. He noted that the PPA had already scared off a number of interested parties.

"The single buyers office is very clearly acting in Eskom’s fiduciary interests, and is not independent, but representing the biggest power generator in the country ... and therefore conflicted to some degree with those of us trying to do something independently," said Long, also adding that the SBO was difficult to deal with.

Vestas Wind Systems representative Kevin McAlpine recommended to the panel that, with regard to the PPA, the scope for negotiating over detail, and risk allocation should be removed, and said that some of the legalities regarding disputes could be "tightened up".

 

 

Edited by: Mariaan Webb
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