Eskom’s delay in approving PPAs could cost country 15 000 jobs – Sarec

19th December 2016 By: Ilan Solomons - Creamer Media Staff Writer

The South African economy is in jeopardy of losing 15 000 possible jobs, associated with 26 Department of Energy- (DoE-) approved renewable energy plants, if State-owned power utility Eskom does not follow through with its legal obligations to finalise power purchasing agreements (PPAs) with the private firms who have been earmarked to build and run these plants, warns the South African Renewable Energy Council (Sarec).
The council on Monday said that since 2011, the DoE’s utility-scale renewable energy initiative, the renewable energy independent power producer procurement programme (REIPPP) had outsourced “a sizeable amount” of its energy infrastructure development to the private sector – a process which initiated the development of 92 privately-owned and -run renewable plants.

Sarec stated that through the REIPPP, a series of solar power, photovoltaic, biomass, landfill, wind, and small hydro plants were set to feed 6 500 MW of power onto the grid. Adding that since conception, half of these had been built and were already operational.

However, the council noted that the construction of the next 26 plants were on hold, as Eskom had delayed signing the contracts, which set the price for how much it would pay for the power, which these privately-owned plants would generate over the next 20 years. Sarec also pointed out that this price had been subject to a competitive bidding process and had already been approved by the DoE

Eskom has previously elaborated that its reluctance to sign PPAs with independent power producers (IPPs) was as a result of not receiving guidance from the DoE on the future of IPP programmes. Eskom has argued that its more stable operating position has resulted in surplus capacity and it has also questioned the costs associated with the IPP programmes, in particular the renewable energy programme.

“Eskom’s refusal to sign PPAs despite this due process being concluded, has delayed indefinitely the financial closure of these plants, meaning construction cannot begin,” Sarec chairperson Brenda Martin elaborated.

According to Martin, there were about 13 000 construction-related jobs that could be lost in the next two years, if the building of the plants did not go ahead. She highlighted that a further 2 000 operational jobs over the next 20 years are also at stake if Eskom did not sign these power purchasing contracts.

Additionally, Martin commented that local economic benefits are at risk. Sarec also estimated that a combined investor value of R50-billion was “hanging in the balance”, as the future of these plants remained uncertain. “This excludes the financial costs of ongoing delays.”