Amid growing frustration around the pending amendments to the Integrated Resource Plan and the impact this will have on future renewable-energy projects in South Africa, State-owned power provider Eskom on Wednesday revealed that the economy has suffered a R9-billion net loss for 2016, owing to a surplus of electricity capacity from solar photovoltaic (PV) and wind energy projects.
The utility added that this net economic loss could last for the next five years, forecasting that there will be a surplus of electricity capacity to 2021.
In a release, Eskom explained that the Council for Scientific and Industrial Research (CSIR) had developed a methodology quantifying the net economic benefit of renewables.
This is achieved by calculating the benefits of reduced unserved energy, as well as cost savings to Eskom. These benefits are then offset against the total tariff paid to the renewable energy independent power producer projects, resulting in a net economic benefit or loss.
For the first six months of 2015, Eskom bought 2 TWh of wind and solar PV energy. The CSIR calculated a total financial benefit of R8.2-billion. This was offset against the R4.3-billion renewable-energy tariff cost, resulting in a net economic benefit of just under R4-billion.
From January to December 2016, the utility bought 6 TWh of renewable energy from solar PV and wind projects. Using the same methodology, it calculated the total financial benefits amounted to R3.2-billion.
However, this was offset against the renewable-energy tariff cost of R12.2-billion, resulting in the net loss of R9-billion.
Eskom has added 5 568 MW of capacity to the grid in the last two years and, over the next five years, it will add a further 8 304 MW of capacity through its new build programme.
The South African Renewable Energy Council warned in December that the economy stood to lose around 15 000 jobs if the utility did not continue signing power purchase agreements (PPAs) with the owners of renewable energy projects.
In a statement, it said these jobs associated with 26 Department of Energy-approved renewable-energy plants, would be lost if State-owned power utility Eskom did not follow through with its legal obligations to finalise PPAs with the private firms that have been selected to build and run these plants.