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IPPs to wait a bit longer for Eskom deal

Energy
Johannesburg - The renewable energy ­industry will have to wait longer for Eskom to sign power purchase agreements with ­renewable energy independent power producers (IPPs) after Energy Minister Mmamoloko Kubayi moved Tuesday's deadline for the financial closure of the power purchase agreements.

The renewable energy industry has accused Eskom of dragging its feet on the conclusion of power purchase agreements with 37 IPPs.

According to the SA Renewable Energy Council (Sarec), the delay was putting about R58 billion at risk.

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Former energy minister Tina Joemat-Pettersson had given an instruction for Eskom to sign the agreements today. Photo: Supplied

Despite the pressure from the industry, Eskom, which is the designated buyer of electricity from IPPs, has maintained that it would sign the power purchase agreements with IPPs at a pace and scale it could afford.

Sarec said on Monday that it was concerned that the signing had been delayed.

Read also: Power from IPPs 'too costly' for Eskom

Sarec said Kubayi’s office had asked for the signing to be delayed until she had met her public enterprises ­counterpart, Lynne Brown. It has been indicated that once the two ministers had met, a new signature deadline would be set, the body said.

“While we recognise the need for the new minister to get up to speed on the issues, financial closure of duly procured renewable power for 37 power purchase agreements now stands at almost two years,” said Sarec chairperson, Brenda Martin.

Clarity sought

Martin last week said former energy minister Tina Joemat-Pettersson had given an instruction for Eskom to sign the agreements today.

“Over the past few weeks, since the previous minister issued her instruction to Eskom, affected IPPs have been working with Eskom officials to ensure that the necessary paperwork is up to date, so that financial closure can be achieved and construction can begin,” Sarec said.

Eskom last week said it was in discussions with the National Treasury, Department of Energy and the Department of Public Enterprises as it sought clarity on how it would recoup costs associated with buying IPP power.

Eskom spokesperson Khulu Phasiwe said Eskom needed clarity on how the costs of the IPPs would be accommodated in the Regulatory Clearing Account (RCA) mechanism. The RCA is a mechanism that compares certain uncontrollable costs and revenues assumed in Nersa’s (National Energy Regulator of SA) Multi-Year Price Determination (MYPD) to actual costs and revenues incurred by Eskom.

Nersa uses the MYPD methodology to evaluate Eskom’s applications for tariff increases and to determine Eskom’s revenue requirements.

In his State of the Nation address in February, President Jacob Zuma gave an assurance that Eskom would sign the power purchase agreements.

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