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IPPs to be key renewables driver, but Eskom to focus on CSP, wind

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IPPs to be key renewables driver, but Eskom to focus on CSP, wind

23rd March 2011

By: Christy van der Merwe

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Deputy Economic Development Minister Enoch Godongwana said on Wednesday that there was no intention within government to push forward renewable energy projects within Eskom, as this would be done by independent power producers (IPPs).

He noted that the power utility’s main renewable energy focus would be one project in concentrated solar power (CSP), and a wind project, and this was largely because these were concessions built into a loan from the World Bank for the construction of coal-fired power stations, which hinged on Eskom pursuing cleaner energy generation.

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His comments came after discussions at a South African Institute of International Affairs dialogue on promoting trade policy reform in South Africa, and specifically the liberalisation of certain sectors, where more competition and increased access could benefit South Africa’s domestic interests.

Other sectors mentioned were those of telecommunications, finance, and transport.

Godongwana noted that liberalisation was already happening, particularly in the renewable energy arena. However, the electricity sector was distinct in that the entrance of more competitors did not signal lower prices on the horizon, and conversely, IPPs were only keen to enter the South African electricity market now that prices were increasing and they could get a favourable return on projects.

Eskom recently announced that it would establish a renewable energy focused division, called the Eskom Renewables Business, which would be operational from April 1.

The utility also stated that the division would concentrate on the roll out of the proposed 100 MW wind farm near Koekenaap in the Western Cape, and the 100 MW CSP plant in the Northern Cape.

The South African Cabinet also recently accepted the country’s second Integrated Resource Plan (IRP2010), to be promulgated by April 1, which states that the contribution of renewable energy to South Africa’s energy generation mix would increase substantially between 2011 and 2030.

The National Energy Regulator of South Africa has also since issued a revision on the tariffs that would be paid for renewable energy, some substantially lower, which has frustrated certain IPPs keen to enter this space.

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