The South African Wind Energy Association (SAWEA) is confident that the tide will turn and that Eskom will soon, and finally, sign the outstanding power purchase agreements (PPAs) that have delayed the renewable energy industry for the past two years.
SAWEA chairperson Mark Pickering outlined the frustrations experienced by the industry at the seventh yearly International Wind Industry conference, Windaba 2017, held in Cape Town this week.
Window four of the Department of Energy’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was due to be signed in July 2016.
“Various dates were missed. We had a date for April, but then there was a Cabinet reshuffle. The next Minister gave us a date for the end of October. . . [Then] there was a Cabinet reshuffle. We had a signal for November 17 and then 20. We now have a tentative date for December 1. . . It may slip too. There is very little certainty. Even if there is a date, will Eskom turn up?
“Eskom has had three board chairpersons and six CEOs. This kind of leadership instability will wreck any organisation and Eskom is currently in a tailspin. It is very difficult to predict what Eskom will do.”
Pickering said SAWEA had devoted the past year to a “massive campaign” of lobbying and building alliances with stakeholders and various players in society in its bid to defend the industry against the Coal Transporters Forum. The forum has brought a High Court interdict to stop Eskom from signing the agreements for bid window four. Pickering claimed the forum had repeated a lot of Eskom’s arguments that the signing would cause hardship.
He said SAWEA had responded with a 1 000-page affidavit “to set the record straight”.
Eskom had in turn responded in a “remarkably clear affidavit” saying they had to sign the PPAs and that “the law compels [them] to”.
“It is fantastic that they have said that under oath. It may end up in court and we will hold Eskom to their word.” Pickering said the case would most likely be held in the first or second quarter of next year, but is likely to be thrown out, as coal transporters only had contracts with Eskom until March next year.
Pickering added that what was of greater concern was the Congress of South African Trade Union's (Cosatu’s) objection to the signing of the PPAs because of the great threat to jobs in the coal mining industry.
“We're very concerned. Cosatu is a significant player. We have put enormous effort to engage with Cosatu to get a better understanding of the issues, but the mining sector is the backbone of Cosatu and anything that challenges the mining sector will be viewed very seriously,” Pickering told Engineering News Online.
He said that, despite the disappointments, the wind industry was resilient.
“Wind power has been around for centuries and will be around in future. We know the tide will turn and that we are on the right side of history. We just need to keep moving forward.”
SAWEA CEO Brenda Martin said manufacturing companies were feeling the brunt of the delays.
“We are certainly observing the biggest pressure points in manufacturing and construction in the industry. There are already casualties . . . DCD Towers in the Eastern Cape, while the GRI Atlantis outfit is the next vulnerable entity.
“They are a massive manufacturing facility employing 300 people and are looking at retrenchment advice.”
Martin added that the local manufacturing and construction industry is not able to thrive. “People are trying their best to sustain confidence and are now wanting to disinvest and not wanting to take legal action if they can avoid it.”
With a series of delays, it has been a battle to stay afloat for smaller companies. But larger, more established companies have managed to rise above the hardship and create jobs.
“At Gouda Wind Farm, in the Western Cape, we invested close to R350-million and hired around 230 people, just for the manufacturing of the towers alone. Looking into the potential project pipeline of the REIPPPP, we stand to invest up to R750-million and create jobs for around 470 people for three years,” said Nordex Acciona Windpower international division operations director Luis Solla.
Solla said the company was committed to contributing towards the local economy, with more investment and jobs planned for manufacturing concrete towers in South Africa over the next three years.
He also called for certainty and a “clear roadmap”.
“If we want to keep growing this business, we need to get stability in institutions,” he said.
Despite challenges, the South African wind power market was poised to do well.
“The South African wind power market is now well on track to early maturity, with over 6 000 MW of wind power already procured, and with more than 550 wind turbines already generating over half of the renewable electricity into the South African grid,” said Martin.
Globally, the industry is looking excellent.
The World Energy Outlook 2017, released by the International Energy Agency in London, has said it foresees the world’s growing energy needs being met first by renewables and then by natural gas over the coming years.
“Renewable sources of energy meet 40% of the increase in primary demand and their explosive growth in the power sector marks the end of the boom years for coal,” the publication said.