Energy Dept considering second determination of IPPs

Thursday, August 16, 2012

Johannesburg - Energy Minister Dipuo Peters on Thursday said she was considering a second determination that would provide additional megawatts in the renewable energy space.

"When we are ready, we will make that announcement. Our decision will be guided by the need to provide a rolling programme to provide for sustainable development through local manufacturing," she told a bidders conference in respect of the Renewable Energy IPP procurement programme.

Peters said that the components should be made in South Africa.

"We owe it to our people to create jobs and get them out of poverty. The renewable energy space is an opportunity for new ventures, new areas of participation and new jobs. There's no reason that these jobs cannot happen here," said the minister, adding that the country wanted to create five million jobs.

South Africa, she said, has endeavoured to create an enabling environment to conduct business. "There is no impediment in this country for you not to establish a manufacturing business here," she said, while also urging investors to notify the department should impediments arise. "We don't want to hear of investors that packed up and just left the country," she said.

South Africa wants to procure 3 725 MW of renewable energy that will be introduced into the energy mix between 2014 and 2016 through the Renewable Energy Independent Power Producer Programme (REIPPP).

According to the Integrated Resource Plan (IRP2010) - which is a 20-year projection on electricity supply and demand - about 42% of electricity generated in South Africa is required to come from renewable resources.

The minister said on Thursday that the IPP programme had received worldwide acclaim.

In July, Peters said that the deadline for the financial closure of the first 28 renewable energy projects in window 1 - that were named as preferred bidders in December - had been extended from the original date of 19 June. The department decided to extend the deadline for the signing of the implementation as a way to assist those bidders that were struggling to finalise bid commitments.

Today, the department said that as of next week it would start the conclusion of outstanding
financial closure agreements with the bidders in window 1. It is hoped that the process will be concluded by the end of the month.

In the second window, 19 bidders which represented 1 043.9 MW collectively were named in May. The deadline for their financial close is 13 December.

"The programme must contribute to the growth of local content and it must promote local manufacturing. This remains a critical non-negotiable," she said.

In the Electricity Regulation Act of 2006, the procurement of new generation capacity must be transparent and competitive. Peters said the programme was one of the most transparent in the world.

"The programme is one of the most transparent in the world. In 2010 published the IRP, we made firm commitment to renewable energy. As government we must reaffirm our position that there is space for both public and private sector participation in the energy sector of this country."

Peters said though there was a realisation that the IRP 201 be reviewed periodically so that it is consistent with the latest trends, " I am of the view that the underlying assumptions for the current IRP remain the same."

The National Development Plan as presented extends the framework for review. "It's important to remember that it is important that the document presented yesterday gives us another opportunity in the next two years to engage to say how do we grow including renewable enrgy and other alternative energy sources."

Window 3 of the bidding process will close on 1 October.

Senior General Manager at Eskom Andrew Etzinger said the parastatal - which would be the buyer of the power - was fully committed to renewable energy, although the country uses a lot of coal. "We must embrace renewable energy," he said.

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