R/€ = 15.26Change: -0.01
R/$ = 14.41Change: -0.03
Au 1057.95 $/ozChange: 0.07
Pt 835.50 $/ozChange: 0.00
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?

And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
RSS Feed
Article   Comments   Other News   Research   Magazine  
Aug 17, 2009

SA working on financial instruments to boost renewable projects

Africa|Environment|Eskom|Generators|Hydropower|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Africa|Energy|Power Generation|Power-generation|Wind Energy|Environmental|Power
Africa|Environment|Eskom|Generators|Hydropower|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Africa|Energy|Power Generation|Power-generation|Wind Energy|Environmental|Power
© Reuse this

The Department of Energy (DoE) was developing financial instruments to ensure that renewable energy becomes a reality in South Africa, said clean energy division chief director David Mahuma on Monday.

Speaking at a conference in Pretoria, hosted by the Institute for Global Dialogue, he said that the government recognised the barriers faced by renewable energy project developers, and accepted that the uptake of these renewable energies did not "come cheaply".

He mentioned a number of initiatives established by the department in order to develop financial instruments, such as the regulator's recently published renewable energy feed-in-tariff (Refit); the renewable energy finance and subsidy office (Refso) within the department; the renewable energy market transformation (REMT) project; and the potential use of tradeable renewable energy certificates.

DoE new and renewable energy director Nomawethu Qase further explained that the renewable energy policy framework of South Africa, which was established in 2003 and was currently under review, set a renewable energy contribution target of 4% of total power generation capacity (equal to about 10 000 GWh) by 2013.

She also noted that while encouraging independent power producer (IPP) participation in meeting these targets, there was a role for Eskom to play and it was decided that the utility should contribute some 6 000 GWh towards the electricity production portion of the target.

Qase further explained that Refso was established in 2005, and was allocated a budget of R5,4-million in the 2008/9 financial year, which it spent, and in the 2009/10 budget, the office had a R10-million financing capability, and of that R6-million was already allocated.

Refso offered one-off capital subsidies to qualifying renewable energy projects, and among other qualifying factors, projects should be located within the borders of South Africa, use commercially viable technologies, and generate at least 1 MW of power. Projects benefiting from Refso funding could also use other financial instruments such as the clean development mechanisms.

The office had already subsidised two hydropower projects, as well as biogas and landfill projects. Out of the funded projects, some 17 permanent jobs and 279 temporary jobs were created, added Qase.

With regard to the REMT project, Qase said that the DoE had about $6-million in donor funds, and said that the department was "begging you [project developers] to assist us in spending that money".

The REMT project looked at assisting developers in bringing projects to bankability through assistance with feasibility studies and environmental-impact assessments.

The department was also involved in the South African wind energy project, looking at establishing a wind atlas, which would, in turn, assist developers in deciding where to locate potential plants.


In addition to discussion around policies and capital expenditure financing of renewable energy projects, the issue of the longer-term sale of this power, was also raised.

Eskom has been designated the renewable energy purchasing authority (Repa), and the single buyer office is also situated within the power utility. With this, comes the obligation to enter into agreement with renewable energy power generators, and pay them for power produced.

Eskom said it was committed to shortening the time taken to conclude power purchase agreements, and the procurement and approval process.

Importantly, the ‘wheeling charges', or transportation of energy from the place of generation to the Eskom transmission grid, would be at the cost of the Repa.

Eskom market development manager Yousuf Haffajee said that the challenge of connecting generators to the grid should not be underestimated, as it was substantial.

Renewable energy generation often takes place in small rural areas, where wind and sun are abundant, and the potential existed to generate 50 MW of wind power in an area that only needs 20 MW . Thus, connection to the national grid was vital.

"I think there are gaps in our grid code," added Haffajee. The issue of grid downtime, and the inability to receive energy would also need to be addressed.

The development of renewable energy power plants, which sat idle because they were unable to connect to the national grid was a situation to be avoided.

Haffajee also stated that in order to have a successful Refit programme, a supportive policy environment was required, as well as a tariff that gives a fair return to project developers and sponsors. There should also be appropriate risk allocation in the power purchase agreement for the seller and the buyer.

Eskom would need to ensure that it had the funds to pay renewable energy generators for the more expensive power they generated. Delegates at the conference, questioned whether the existing Eskom tariff would be adequate to ensure that.

Haffajee noted that estimates have shown that to meet the almost 700 MW target of renewable energy generation required by 2013, it would cost about R3-billion a year to recover the costs of purchasing that power.

A massive electricity price increase would be required to meet those targets and costs.

He noted that tariffs were already under pressure for current build programme, and careful decisions would have to be made considering additional funding schemes, beyond tariffs.

"We must have comfort that the cost recovery mechanisms are in place. Appropriate cost recovery principles are due for regulator board approval in August or September this year," said Haffajee.

The criteria for selecting IPPs would also need to be clarified, and unless the integrated resources plan was gazetted, it would remain unclear. This would deal with the preference to plant location, so that it contributes to grid stabilisation and mitigates against transmission losses.



Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
© Reuse this Comment Guidelines (150 word limit)
Other Renewable Energy News
LITHIUM GUN The battery-powered bolting gun is ideal for wind turbine maintenance
While there are battery-powered bolting solutions for wind turbine maintenance, the general consensus among wind energy industry stakeholders is that these solutions lack battery longevity and often succumb to overheating and bending, says bolting systems...
DIFFERENT STROKES Turbine foundations are designed for site-specific conditions, and the lack of clear consensus in international design codes is a problem
While wind turbines are standard products that are designed, verified by prototype testing and independently certified, their foundations are designed on a project-by-project basis to suit site-specific ground conditions. This, according to engineering consulting...
INTEGRATED EARTHING Hatch Goba has researched new groundmat designs for grid integration at wind energy facilities
Engineering consulting firm Hatch Goba has introduced a new approach to integrated earthing for wind energy facilities, using insulated cables to connect the individual wind turbine groundmats to the substation groundmat, taking the equivalent circuit of the entire...
Latest News
French conglomerate Bollore may have to halt work on the Niger to Benin section of its giant West Africa rail project after a rival company won a court order to stop it going ahead. The dispute concerns rival rail schemes in the area.
A week ahead of the second annual gathering of the Forum on China–Africa Cooperation (Focac), in Johannesburg, the JSE is rolling out the proverbial red carpet for Chinese investors looking to Africa’s largest bourse for possible investment opportunities, calling...
The South African National Roads Agency Limited (Sanral) applied for leave to appeal on Friday against the Western Cape High Court judgment that set aside the approvals that would enable it to toll sections of the N1 and N2 freeways in Cape Town. This prompted the...
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 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 infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
NICK CHRISTODOULOU As about 58% of data stored by organisations is dark, they must identify this dark data to expose risks and valuable information
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
BRIAN VERWEY Effective management, review and administration of non-core elements can improve business operations and increase revenue and decrease unforeseen risks
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...
Alert Close
Embed Code Close
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96