/ 30 October 2012

SA’s renewable energy output to double

South Africa's energy mix is due to be shaken up as the capacity of independent power producers is nearly doubled.
South Africa's energy mix is due to be shaken up as the capacity of independent power producers is nearly doubled.

Energy Minister Dipuo Peters said on Monday the National Energy Regulator of South Africa had given her the go-ahead to increase the country's baseload energy capacity, renewable energy capacity, and extra energy for risk mitigation by 1 200MW.

The big elements of this would be an extra 2 500MW sourced from coal by 2024, 2 652MW from gas by 2025 and 2 609MW from hydro power by 2024.

But the biggest news comes for independent power producers. They are currently given an allocation of 3 725MW of power to produce, which is being determined through bidding phases. This will nearly double by an extra 3 200MW.

The small size of the first power allocation, given that it was to be divided between dozens of producers, had created controversy. Richard Worthington, manager of the World Wide Fund for nature's climate change programme, said it made it hard for independent producers to compete. And it also meant the scale was too small to sustain local industry, he said.

Most of the new allocation will come in the form of offshore wind power generation – 1 470MW – and solar – 1 075MW – which will be allocated after the current bids to provide independent power generation are finalised.

The contracts for the first of these, for 1 400MW between 28 winning bidders, will be signed next week, said Peters.

"I am pleased to announce that South Africa is ready to conclude about R47-billion of renewable power generation," she said.

This comes after months of delays in the process – the winners of this first phase were announced in December last year – which Peters put down to all the administration that had to occur. The preferred bidders for the second window have been chosen, and these would be formalised by March next year, she said. R28-billion has been set aside for this.

The window for the third phase has been delayed until next year.

Eskom will sign a power-purchase agreement with each of the winning bidders, with the phases expected to cost a total of R100-billion and contribute 3 725MW of power by 2016, and 3% of the 16% Eskom applied for in a price-hike request last week is to cover the costs of independent power producers.