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Renewables Ructions

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Renewables Ructions

13th May 2011

By: Terence Creamer
Creamer Media Editor

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At first glance, 2011 looked set to be a milestone year for the deployment of renewable energy in South Africa.

Firstly, the intensive process to conclude an integrated resource plan for electricity, which guides the deployment of generation tech- nologies up until 2030, was reaching a climax. And, when the document eventually emerged, even more capacity had been set aside for technologies such as wind and solar than had been the case in the draft document – in fact, the overall contribution of renewable energy to the mix was increased from the 11 400 MW in the draft to 17 800 MW.

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Secondly, it was anticipated that the procurement process for the first round of renewable-energy projects would get under way in the first quarter. The first round would be for a relatively modest 1 025 MW, which had been catered for under the tariff increase awarded to Eskom for the period 2010 to 2013 – a figure that stands at more than R8-billion.

Thirdly, there were also several associated developments that were strongly supportive of an accelerated renewable-energy agenda.

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South Africa was also due to host the seventeenth Conference of the Parties of the United Nations Framework Convention on Climate Change, or COP17, which will take place in Durban from November 28 to December 9. Therefore, local politicians were dead keen for positive renewables progress, which could be highlighted as the world’s attention began turning to this coal-heavy energy economy. The Department of Trade and Industry, the Economic Development Department and South Africa’s various development finance insti-tutions placed the green economy (primarily spin-off industries from what is anticipated to be a multibillion-rand, multidecade renewable-energy roll-out) at the very centre of industrial policy and its associated action plans and projects. Then there was the spectre of a carbon tax, which the National Treasury argued was necessary in order to provide a more accurate pricing signal for South Africa’s carbon-dioxide “externality”.

In other words, all the signs pointed to a serious pick-up in renewable-energy activity.

However, the year has, thus far, been a disappointment. Instead of a procurement process for the first round, the National Energy Regulator of South Africa announced a downward revision to the renewable-energy feed-in tariffs, or Refit – a development that created much anxiety and new uncertainty. There are even fears that the Department of Energy and the National Treasury may abandon Refit entirely and move ahead on an auction-type basis.

There have also been some reported delays and irregularities surrounding the issuance of environmental-impact assessment records of decisions and suggestions of attempts by government to pit renewable-energy developers against one another in a bid get them to accept a lower Refit, or even an auction.

So, while other countries are building renewable-energy projects and creating the basis for industrial development around those roll-outs, South Africa continues to fiddle. My fear is that, by the time we are eventually ready, the package of benefits – from job creation to industrialisation development and agricultural spin-offs – may no longer be available.

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