The South African Renewable Energy Council has suggested that the country’s utility may soon face legal action for its decision not to sign fresh power purchase agreements with renewable energy projects.
According to media reports, the council chairman has suggested that Eskom has not done enough to promote the advancement of renewable energy infrastructure in the country. While the utility is bound to signed PPAs and procure electricity from renewable energy projects auctioned by the government, the company has stopped doing so citing transmission constraints.
In August last year, Eskom had refused to sign PPA with a concentrated solar power project backed by SolarReserve with capacity of 100 megawatts. The project has a tariff of 12.40/kWh and the agreement was supposed to be signed for a duration of 20 years.
Eskom openly stated that it will no longer sign PPAs with any renewable energy projects. The utility stated that there was excess renewable energy going into the grid which has also increased the cost of power.
Eskom has expressed difficulty in absorption of the rapidly increasing renewable energy capacity in the country due to transmission capacity constraints. The utility recently secured funding to strengthen power grid. The African Development Bank (AfDB) announced a $1.34 billion loan to South African utility Eskom for the expansion and strengthening of its transmission network.
The council stated that this approach by the utility has jeopardised renewable energy investments worth $3.63 billion and has put thousands of jobs at risk. Additionally, it has also raised doubts about the future of the Renewable Energy Independent Power Producer Procurement auction programme. In 2015 the Minister of Energy, Tina Joemat-Pettersson, has announced that she would approach the National Energy Regulator (NERSA) to make arrangements to offer an additional 6.3 GW in future auctions.
