There is scope for more IPPs in Africa, South Africa – SAPP CEO

20th February 2019 By: Tasneem Bulbulia - Creamer Media Reporter

There is a need to increase electricity trading to deal with imbalances in the electricity sector, South African Power Pool (SAPP) CEO Stephen Dehwa said at a South African Independent Power Producers Association (Saippa) seminar on Wednesday.

To ensure that there was adequate energy at any given time and at the right price, there was scope for more IPPs to operate in Africa and South Africa, he noted.

Dehwa indicated that there had been growing confidence in the IPP market of late.

He indicated that there would soon be a fully African power market.

For example, in terms of current power pools in Africa, he noted that there were serious discussions regarding the interconnectedness between Southern African power pools and East African power pools, which would facilitate more opportunities for trade.

This will necessitate more players to be on board.

He added that financial markets also had a role to play in terms of the funding of infrastructure required to trade electricity.

PowerX CEO Thembani Bukula, meanwhile, said that, while the existing generation capacity in South Africa seemed adequate on paper, the reality was a different matter.

He posited that it was uneconomic to continue with the current model of reviving the older plants in the country.

Therefore, he highlighted the need for new generation capacity, with the country potentially looking at a 20- to 30-year transition period, as the new generation capacity still has to be built.

He agreed that there was much scope and potential for the IPP market in South Africa.

However, he noted that the trading environment would have to be altered to enable IPPs to trade electricity.   

He noted that just as own generational and bilateral agreements were permissible and encouraged during periods of load-shedding, they had become less of a grudge purchase by businesses in the past few years.

Moreover, he said that, moving forward, funding institutions and energy-intensive users, such as mining houses, should be connected in one way or the other, as this will engender parties with common goals, through with trading and bilateral agreements will emerge.

“The fortunate part is that we have legislation that allows for nondiscriminate access to the grid and fees are still at levels that are affordable, so in no time I expect to find one or two of these bilateral agreements between a funding institution, a consumer on the one side, and an IPP on the other, outside of the current white noise.”