Eskom welcomes introduction to IPPs

Monday, November 5, 2012

Pretoria - With the introduction of renewable energy into the country's energy mix, Eskom has welcomed the signing of agreements between government and independent power producers, saying it will change the landscape of electricity generation.

Managing Director of the System Operations and Planning Division at the power parastatal, Kannan Lakmeeharan, described the signing ceremony of the Department of Energy's Renewable Energy Independent Power Producer Programme (REIPPP) for the Window 1 preferred bidders as being a historic milestone.

"Today is a historic day as it represents a significant milestone in the electricity supply industry on two fronts - in the first it's the first long term power purchase agreement with independent power producers since the days of Cahora Bassa and the first to be done in our democratic dispensation.

"It also sees the introduction of renewable energy power production into the grid for the first time on a significant scale," he said, on Monday ahead of the ceremony.

The department earlier on Monday signed implementation agreements and direct agreements with each of the 28 preferred bidders - in wind and solar projects - of Window 1 of the REIPPP. Eskom will sign power purchase agreements with the bidders.

The power parastatal has expressed its commitment to moving to a low emitting and low water use energy mix, adding that it would not be able to meet the country's energy requirements on its own.

"Eskom is also clear that it cannot meet the future electricity needs of the country alone and it welcomes the involvement of the private sector to support it in meeting the future needs of our country," said Lakmeeharan.

Those needs included distributor generation capacity to the customer as well as government's efforts to create jobs.

The promulgation of the IRP2010 by government marked a huge step forward for the electricity supply industry. The plan provides a roadmap to ensure that South Africa has the infrastructure it needs to power growth and employment in the long term and in a way that is cleaner and more sustainable.

IPPS' are expected to build at least 30% of the new capacity.

Of the future for electricity generation, Lakmeeharan said: "The electricity industry, as we increasingly see, will be one of a hybrid nature with Eskom still retaining a significant position but a vibrant private sector developing too. The industry will be driven by the need for security of supply and climate change concerns, energy efficiency and technological advancements. It will look very different in 2030 to the way it looks now."

Eskom, he said, looked forward to connecting the new power producers to the grid and buying power from them.

"We [further] look forward to guidance from government on the implementation of the IRP2010 as a whole, including the role that Eskom will play. We are keen as Eskom to play a significant role in the new build beyond 2013 after we complete Kusile."

President Jacob Zuma announced in his State of the Nation Address a massive infrastructure plan comprising various development projects. One of the Strategic Integrated Projects includes green energy in support of the South African economy.

The power parastatal was keen to see the new build programme momentum continue.

"We are keen to see the new build momentum continue so that South Africa does not leave it again too late to start building new capacity. It needs to support growth and jobs in the 2020s and beyond," he said.

He added that continuing the momentum will ensure that the industry does not again lose the skills and expertise needed to keep it going.

Commenting on the downgrade of Eskom by one notch by a credit rating agency in October, Lakmeeharan said: "Reflecting on that, it is important to continue on a path to cost -reflective tariffs to ensure long term viability and that of the industry and to ensure access to debt at reasonable cost."

Energy Minister Dipuo Peters said at the signing ceremony that although the country endured criticism, South Africa was committed to cleaner forms of energy.

"This is an auspicious day for the government of South Africa, the African continent and the energy sector as a whole," said Peters.

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