A week after parliamentarians handed in a private members Bill on feed-in tariffs, government has promised to have a strategy by February. Feed-in tariffs pay private renewable power generators a set fee for power they feed into the grid.
Thembani Bukula, head of electricity regulation at the national electricity regulator (Nersa), told reporters this week although no exact feed-in tariffs had been decided on, Nersa would reveal these early next year. He promised competitive tariffs for renewable investors that would cover their start-up costs and give them reasonable margins.
He said the government’s renewable energy White Paper has set a target of 10 000GWh that will be generated by renewables for South Africa by 2013. That would make up 4% of the country’s energy consumption, with coal still the main energy provider.
He said Nersa believed that the feed-in tariff system was the best tool to create a viable renewable energy industry.
Last week parliamentarians frustrated with the slow pace of developing South Africa’s own feed-in system launched their own private members Bill. At the launch, the sponsor of the Bill, Ruth Rabinowitz of the Inkatha Freedom Party, criticised government and specifically Finance Minister Trevor Manuel’s lacklustre approach to renewables.
“Currently there is no integrated vision or strategy to fast-track development of a renewable energy industry although we have a plentiful supply of free solar energy for most of the year,” she said. “Hopefully our Bill will be a wake-up call to ministers who should be driving the renewables programme to which they largely pay lip service.”
Treasury spokesperson Thoraya Pandy said treasury supports increasing renewable energy production. “We are pleased that Nersa, on behalf of the department of minerals and energy, has established a working team to advise on feed-in tariffs,” she said.
Pandy said Manuel earmarked R2-billion for renewable energy in the 2008 budget in February, and proposals are under consideration for the use of the funds.
Peet du Plooy, trade and investment programme adviser for WWF South Africa, said feed-in tariffs have been globally the most successful mechanism for supporting renewables, with success stories in Germany and Spain. “It is way overdue in South Africa and when we get it we’ll finally catch up not just with rich nations, but with a whole host of developing nations, including Algeria, Kenya, Mauritius and Uganda.”
At the moment the tariffs cover four key technologies: wind, concentrated solar, landfill gas and small hydro.
The guidelines’ indicative tariff range at this stage is 50 to 80c/kWh. Du Plooy said getting the price right would be essential if any serious investment is to happen.
The minerals and energy department’s “capital subsidy for renewables is around 1% of the project value”, he said. “Little wonder there has not been significant take-up.”
Du Plooy is particularly worried that the Nersa proposal warns against “over-subscription” to the tariff. “In a country with more than 90% of electricity generated from coal, it is hard to imagine what ‘too much renewables’ might mean,” Du Plooy said.
He believes the government should set the volume of renewable energy it wants to generate and then auction it to the lowest bidders, rather than set the price/tariff first and then see what volume of “subscription” one could get at that price.