Eskom postpones signing IPP agreement

Concern over the financial health of South Africa’s state-owned power utility has raised the premium investors demand to hold its debt over that of the nation’s to a record .Electricity power lines and cooling towers are seen at Eskom Holdings Ltd.'s Kendal coal-fired power station in Delmas, South Africa . Photographer: Nadine Hutton/Bloomberg

Concern over the financial health of South Africa’s state-owned power utility has raised the premium investors demand to hold its debt over that of the nation’s to a record .Electricity power lines and cooling towers are seen at Eskom Holdings Ltd.'s Kendal coal-fired power station in Delmas, South Africa . Photographer: Nadine Hutton/Bloomberg

Published Jul 28, 2016

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Johannesburg - Eskom on Thursday, postponed the signing of a 20-year power purchase agreement with Redstone Solar Thermal Power Project, an independent power producer, “until further notice”.

Eskom chief executive, Brian Molefe, was scheduled to sign the multi-billion rand agreement with Redstone on Thursday in Johannesburg, but the deal was called off on the eleventh hour.

Located in Postmasburg, near Kimberley in the Northern Cape, Redstone Solar Thermal Power Project is led by SolarReserve, a global developer of utility-scale solar power projects and advanced solar thermal technology, and International Company for Water and Power Projects.

In a statement, the national power supplier said the postponement was purely on certain conditions precedent not being met.

The agreement would have seen Eskom buy 100MW from the project for an estimated R50 billion for the duration of the contract.

This comes as Eskom recently decided not to sign on any more Independent Power Producers, after the current round of contracts was finalised, which has led to fears of electricity shortages and blackouts.

Eskom board chairman Ben Ngubane wrote to Energy Minister Tina Joemat-Pettersson last week to inform her that the board would not sign further power purchase agreements without engagement.

The Department of Energy (DoE) launched the Renewable Energy Independent Power Producer Procurement Programme (RE-IPPP) in 2011, which called for 3,725MW of renewable energy technologies.

Capacity under existing signed agreements was expected to be in commercial operation by the end of 2018.

Eskom concluded power purchase agreements (PPAs) with successful bidders.

On Thursday, Eskom reiterated that it had received assurance from the National Energy Regulator of South Africa (Nersa) that the PPAs costs would be treated as a pass-through for revenue regulation purposes, and would be recovered through the regulatory clearing account (RCA) process.

To date, Eskom has contracted for 3 901MW of renewable IPP capacity, of which 2 145MW has been connected to the grid.

“We expect 1 030MW from the RE-IPPP Programme to be commissioned during 2016/17, including 504MW wind, 510MW solar PV, 4MW hydro and 11MW landfill,” Eskom said.

“Under the DoE gas peaker programme, the 670MW from Avon came into commercial operation last week.”

African News Agency

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