State-owned power utility Eskom was ready to connect and pay renewable energy independent power producers (IPPs), and wanted to do this “as soon as possible”, said operations and planning division MD Kannan Lakmeeharan.

Speaking at the Energy Indaba in Sandton, the Eskom official said that the funds to pay IPPs had been collected through tariffs, and had been ring-fenced specifically for the purpose.

It was envisaged that the procurement process for 1 025 MW of renewable energy would be commissioned over the next three to four years.

Lakmeeharan also noted that Eskom had conducted a grid-connection capacity study, and could connect about 4 500 MW of new power in the Northern Cape, Western Cape and Eastern Cape over the next ten years, with minimal upgrades to the existing transmission network.

He stated that Eskom was establishing a grid access customer unit, which would likely be launched in April, and would treat the IPP as a customer, rather than a competitor.

This was in line with the announcement by the Department of Energy that a fully ring-fenced interim independent systems and market operator (ISMO) would be established within Eskom.

The power utility previously said that it had already signed up 373 MW of private power under its medium-term power purchase programme (MTPPP), which was also funded through the electricity tariff.

Eskom was also supporting municipalities, which would start running their own existing generation plant, and some 410 MW had already been signed up under this programme.

The power generator has indicated that electricity supply during 2011 and 2012 would be very tight, and thus it was keen to add as much generation capacity as possible to cover this period before the next slew of baseload generation capacity came on line.

Dewey & LeBoeuf Johannesburg energy and project finance partner Scott Brodsky said that ISMO within Eskom was a practical interim solution, as an entirely new entity would take time to establish.

Brodsky also noted that although Eskom was the initial buyer, it should also be able to transfer and assign responsibility for procurement to the eventual ISMO that would be established. Government has said it would support this, although it was not certain what form this support would take.

He also stated that progress on the renewable energy feed in tariff (Refit) on the part of the government and the National Energy Regulator of South Africa (Nersa) were encouraging, however, there was “still a lot more to be done, in a short space of time”.

He noted a number of things that needed to be done, and these included: the finalisation and promulgation of the regulatory regime, which was expected on April 1, finalisation of the rules for selection and confirmation of the tariffs.

Alignment of Refit documentation, and confirmation of grid connection terms were also required.

Brodsky added that associated documentation, such as connection agreements and distribution and transmission direct agreements, which were under review, would also be required.