Positive response to renewal energy process

Published Jun 19, 2012


Professionals and business people who are part of the South African solar market responded positively to the renewal energy independent power producers (REIPP) bidding process but cited that requirements for local content and finances remain a challenge.

Respondents from Eskom, Standard Bank and environmental groups were part of the 35 000 people who took part in a survey conducted by Solar South Africa in the past two weeks.

The survey also included the recent successful independent power producers’ bidders.

According to the survey, respondents indicated an overall positive attitude towards the programme but were divided on whether the solar market would be able to achieve its goals in the next five years or not.

Last week the National Energy Regulator of SA (Nersa) approved power licences to 28 preferred bidders.

Out of 53 bidders, the 28 were bidders were first given the green light by Energy Minister, Dipuo Peters in December last year. Department of energy had set a target of 3 725 megawatts of energy to be sourced from independent power producers by 2016.

Eighteen of these projects included the use of solar photovoltaic technology also known as PV system , which would produce 631.53MW and two would use concentrated solar power to generate 150MW.

The rest included a mix of wind projects and other power generation projects.

Responding to a question about what factors were behind failure of a large portion of bids, over 40 percent of the respondents said that the criteria to achieve local content was the mot difficult part of the bidding process.

Some also indicated that there was a generally poor financial environment and lack of capital.

Asked about the future of the industry and what issues were likely to constrain development, respondents said lack of necessary expertise among local workforce followed by lack of policy support to maintain industry momentum.

Eskom’s acting general manager, Barry McColl said: “Now that the Department of Energy has announced the exciting solar development allocations for the country I believe the developers will be faced with the challenge of developing viable projects on time in a country that has very limited experience of the technology and a low skills base.”

He said for developers to attract finance, they must ensure that they have secured proper land rights, have researched the solar resource at sight and had partnered with a proven technology supplier and a strong management team.

Daniel Schwab of BrightSource Energy, said there were still inherent imbalances within the policy and regulatory environment that favour some technologies and energy sources over others.

He called for a vibrant and an open competitive industry.

“Investors want to know that the market will drive their investment decision not politics or any other market inefficient parameters.”

Standard Bank’s director, Paul Eardley Taylor, said the biggest challenge facing the country’s solar industry in the short-term period was the underlying technologies and projects continuing price decline and transmission grid being expanded and strengthened in order to facilitate renewable energy.

He also advised bidders to start the bidding process early.

Twelve percent of the respondents thought that a fully operational solar industry would be created in the couple of years meanwhile 75 percent said they were confident that within the next five to nine years it would be up and running.

Linda Mabhena, a senior legal and compliance director at Mulilo Renewable Energy which has been selected as one of the preferred bidders, said the next challenge for the developers would be securing necessary finance.

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