The South African Wind Energy Association (SAWEA) has dismissed as a “falsehood” claims by the National Union of Metalworkers (Numsa) and Transform RSA that the 27 renewable-energy projects, which the two organisations are seeking to block through a court challenge, will raise the cost of electricity in South Africa.

Earlier this week, the Department of Energy refrained from overseeing the signing of 27 renewable energy projects as planned, owing to the legal challenge, which will be heard on March 27.

The projects, which were bid into South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in 2014 and procured in 2015, stalled after Eskom announced in early 2016 that it would no longer conclude power purchase agreements (PPAs) with renewable-energy independent power producers (IPPs), owing to its return to a generation surplus.

SAWEA CEO Brenda Martin described claims that the IPP roll-out would raise the cost of electricity as incorrect. “It is noteworthy that the statement offers no reliable evidence in support of this falsehood,” she said.

The new IPPs, she added, would produce power that cost substantially less than the cost of Eskom’s new coal-fired power from Medupi and Kusile, and were also expected to cost less than Eskom’s current average sales price of electricity.

The DoE disclosed the the 20-year PPAs for the wind projects would have associated tariffs ranging from 56c/kWh to 76c/kWh, while the solar photovoltaic (PV) tariffs range from 77c/kWh to 87c/kWh. The tariff for the concentrated solar power project selected during Bid Window 3.5 was not immediately disclosed.

Eskom has not disclosed the final cost of generation from Medupi and Kusile, but estimates in the public domain point to generation costs well above 100c/kWh. It has also emerged that the tariffs associated with two IPP coal baseload projects, which have not yet been procured by the DoE, are higher than 100c/kWh.

IPP Office head Karen Breytenbach has also stressed that all authorisations, including the endorsement of the National Energy Regulator of South Africa (Nersa), had been secured for the 27 projects. The implication is that any IPP costs will be treated as a full “pass through” for Eskom, so as not to place any further burden on the utility’s finances.

However, coal proponents continue to highlight the dispatchable nature of the electricity produced from coal-fired stations and argue that, given the country’s state of development, South Africa should not be prevented from continuing to exploit its abundant coal resources in support of further industrialisation.

Mining & Energy Advisory partner Ted Blom is opposed to the conclusion of the PPAs on the basis that they are being procured under a “profit umbrella” created by surging power tariffs. “Outsiders seeing this, and knowing that government has taken control of a broken Eskom, are queuing at the door with energy projects that are virtually guaranteed to make money under this artificial price floor,” Blom claims.

Economic risk consultant Rob Jeffrey, who is a strong advocate of coal and nuclear, argues that proceeding with the IPPs would be an economically and financially damaging decision in light of the country’s current supply surplus.

For its part, Numsa has a more nuanced position. The union has reaffirmed its support for a transition “from dirty energy to clean renewable energy”.

However, Numsa has called for a “just transition”, which implies not only a protection of coal workers during the switch, but also a “socially owned renewable sector”, whereby the plants fall under public, community or collective ownership, rather than IPP ownership.

SAWEA agrees that job losses should be avoided wherever possible, but says the imminent closures of Eskom’s old coal-fired power stations are inevitable and unrelated to the renewable-energy procurement programme.

“The coal plants have reached the end of their useful lives and are now directly stranded by the new coal-fired capacity being brought on line by Medupi and Kusile,” Martin argued.

In its recently published reasons for decision (RfD) document relating to its determination that Eskom’s tariff increase of 2018/9 be limited to 5.23%, Nersa directed Eskom to reduce excess capacity and its reserve margin by closing expensive coal capacity.

Nersa removed Eskom’s most expensive conventional power station, Arnot, with an installed capacity of 2 232 MW, from the 2018/19 production plan. This, the RfD states, results in a 1.3-billion coal-burn saving for the year, along with maintenance savings of R711-million. It also noted that, based on Eskom’s application, Hendrina was not expected to produce any electricity, as it will be placed into “cold reserve”.

SAWEA argued, too, that Numsa’s suggestion that 30 000 working class families were at risk as a result should the 27 PPAs be signed was “clearly an error”, as publically available information on Eskom’s power station employment figures shows the figure to be overstated.

“The attempt to halt conclusion of 27 duly procured renewable energy PPAs by Numsa and Transform SA is based on questionable data and does not sufficiently take into account the long-term interests of South Africans,” Martin said. “Job losses must be avoided wherever possible, but false claims do not enable sound decision-making.”

Energy Minister Jeff Radebe has indicated that the signing of the project agreements will proceed on a date to be announced “immediately after” the court case on March 27.

Radebe also told Business Day that the IRP, which was approved by Cabinet in December, but never released of Gazetted, has been sent back to Cabinet for reprocessing.

He said recently that he would be making an announcement on the status of the IRP and the Integrated Energy Plan in the not-too-distant future, having identified progress on the two documents as a priority for his first 100 days in office. Radebe was appointed Energy Minister by President Cyril Ramaphosa on February 26.