Refit not sufficient to stimulate SA renewable sector

Although South Africa's renewable energy feed-in-tariff (Refit) has sent a positive signal to industry, which spurred an explosion of interest, there were still major impediments confronting the industry, said University of Cape Town professor Anton Eberhard.

One of the elements that was lacking, was a decision on how much renewable energy would be contracted [bought]. The price certainty offered by the National Energy Regulator of South Africa-stipulated tariffs had not been accompanied by volume certainty.

Eskom system operations and planning manager Kannan Lakmeeharan further explained that there was no clarity on whether or not the Refit single buyer office (SBO), which was located within Eskom, would be required to buy all energy generated from renewables, or whether there would be a limit on how much the SBO would offtake.

This was an important distinction, because if there was a limit, the SBO would have to make decisions on who it bought renewable energy from, and would not buy from all generators.

"Contracting of renewable energy needs to be finalised in a purposeful way," affirmed Eberhard.

Many renewable energy industry participants were adamant that there should be no limit on the amount of renewable energy bought by the SBO. They also did not wish to compete in a tender-type process to sell the renewable energy they generated. It was envisaged that the least cost option would always be chosen by the SBO if there were a limit, which would exclude certain more expensive technologies.

This emphasised the need for clarity on the integrated resource plan for the country, which would show exactly what space was gazetted for renewable energy to provide for in the energy mix going forward.

Mandatory renewable energy targets laid out by government would signal strong commitment, which would then allow investors to assess the potential for renewable energy component manufacture and downstream industry opportunities.

"The key issue is who buys the renewable energy, because someone has to buy it and blend it into the price, because we need to recover the costs through the electricity tariff," said Lakmeeharan.

"The building blocks are there, but it's not in place," said Lakmeeharan of the Refit.

Nersa has stated that it would finalise the power purchase agreement framework, a vital component of the Refit, by the end of November.