http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.49Change: -0.02
R/$ = 11.88Change: 0.20
Au 1214.08 $/ozChange: 19.92
Pt 1149.50 $/ozChange: 15.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
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 Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Aug 17, 2009

SA working on financial instruments to boost renewable projects

Back
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
africa-company|environment|eskom|generators|hydropower|project|projects|renewable-energy|renewable-energy-company|resources|africa|energy|power-generation|power-generation-industry-term|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.

LONGER-TERM FINANCING QUESTIONED

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
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
South Africa’s crude steel production dropped by a sizeable 17.2% year-on-year to an estimated 530 000 t in April, amplifying a global trend that saw world steel production decline by a comparatively marginal 1.7% to 135-million tons in the fourth month of the year....
The Treasure the Karoo Action Group (TKAG) on Friday called on government to delay publishing final regulations and issuing rights for shale gas exploration in the Karoo, until a 24-month strategic environmental assessment (SEA) has been concluded. TKAG CEO Jonathan...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
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.
 
 
 
 
 
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
FREDRIK JEJDLING Sustainability becomes an important part of a business’ decision-making process
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
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
 
 
Close
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