Johannesburg - Eskom wants to meet the Department of Energy to re-evaluate the need for independent power producers before signing further agreements, including one for a solar project that was due to be finalised on August 24.
“We’re saying, ‘let’s have a discussion’ before we sign”’ the power-purchase agreement with Redstone, Eskom spokesman Khulu Phasiwe said by phone on Monday, referring to a supply deal with ACWA Power International for a $900 million, 100-megawatt solar power plant, planned for the Northern Cape. “Obviously the consumer will be the one bearing the brunt of these decisions that we are taking.”
The cost of the project, which includes a 20-year supply arrangement, had risen to R62 billion ($4.3 billion) from R50 billion, Phasiwe said. “For Eskom to commit to 62 billion rand for something that we don’t need? In any other company that would be called a wasteful expenditure.”
Generation capacity
The utility said it has enough generation capacity to meet demand and shouldn’t be bound to buying more expensive renewable energy from independent producers, while backers of the Department of Energy’s programme to diversify the country’s power mix have criticised the company for delaying investment in alternatives to coal-fired plants.
ACWA Power and the Department of Energy didn’t immediately respond to phone calls and emails seeking comment.
South Africa has attracted R194 billion of investment in energy infrastructure through its programme to obtain power from independent producers of the renewable variety. It also plans to get electricity from non-state operators using coal and gas.
The government pushed to diversify its sources of electricity as Eskom, which provides about 90 percent of the nation’s power, had to ration supply after decades of underinvestment in ageing plants and delays in the startup of new ones. Business and consumers in the continent’s biggest economy endured almost-daily scheduled power cuts in the first half of last year.
* With assistance from Kevin Crowley
BLOOMBERG