Delays and halted bidding windows in relation to the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) were some of the greatest challenges highlighted by South African renewable energy industry stakeholders, said the South African Wind Energy Association (SAWEA) on February 11.

The delays and inconsistent procurement timeline has negatively impacted on the continuous development and investment into industry, SAWEA added.

The association reported these and other findings following engagements with the broader wind power sector in an effort to highlight the challenges that the industry was experiencing.

The aim of collecting this feedback was to present it to the Presidency’s Project Management Office in preparation for President Cyril Ramaphosa’s 2022 State of the Nation Address, which was delivered on February 10.

The focus of the engagements was to assess challenges the industry was experiencing in executing unlicensed 100 MW renewable energy projects, as well as challenges faced in executing other independent power projects.

“As government aims to roll out an additional 5 GW of renewables in the next 12 months, this direct engagement with the President’s Office has been a unique opportunity, as we have been able to directly present challenges and possible solutions orchestrated by our captains of industry,” said SAWEA chair Mercia Grimbeek in a statement.

She said the inconsistent “start and stop” of the REIPPPP impacted on the growth rate for local manufacturing and the overall industrialisation opportunities that renewable energy presented.

This inconsistency was causing financiers to become risk averse because of concerns about future market access for energy.

SAWEA discovered that the industry sought a market with an open model that had no risk of political interference. This was because lenders might require large-scale security packages – such as partial credit guarantees – to cover the risk of possible default and early termination, thereby making investment less desirable.

Further, the industry also highlighted that the updated forecasting requirements had impacted power pricing tariffs and that there are identifiable gaps and inadequacies in how the penalties for deviation were calculated.

To overcome this, it was suggested that a local standard should be developed in collaboration with the buyer – State-owned utility Eskom – to ensure that it is more representative of the local market.

SAWEA said the sector had called for improved grid access and capacity, suggesting that grid planning should be integrated and contributions by the renewable industry considered based on projects that are shovel ready. This would “ease out” the existing grid constraints, as areas that support further development would be considered.

“Looking specifically at the Northern Cape and Western Cape grid, the current constraints are preventing large numbers of quality market ready projects due to the application of a stability factor, which specifically limits the uptake of renewable capacity on the grid,” added Grimbeek.

She pointed out that the Northern Cape was host to significant wind resources and a number of shovel-ready projects, which could not be bid unless there was increased grid capacity in the region. The same was true for the Eastern Cape, which Grimbeek said may be at risk of not being available to participate beyond Bid Window 6 of the REIPPPP.

In terms of policies around private power purchase agreements (PPAs), SAWEA highlighted that the 100 MW reform required unclear process and rules regarding licensing under the revised 100 MW cap. This needed clarification. 

Moreover, the process related to municipal energy procurement needed to be streamlined, as there was a risk of having different processes for all municipalities.

“Industry has called for clarity on these projects, including grid capacity to allow for effective wheeling from high resourced areas and have suggested clearer rules and called for wheeling costs to be fixed and linked to the [Consumer Price Index] over the initial PPA term,” Grimbeek concluded.