Johannesburg - An electrifying standoff appears to be brewing between renewable energy players and the power utility, Eskom.
Independent renewable power companies are also at odds with each other. The government expressed concern that its plans for the addition of new renewables capacity could be disrupted, should a legal challenge launched against Eskom’s recently announced grid allocation rules prevail and has also indicated that it would favour a settlement instead.
G7 Renewable Energies, together with two of its wind farm companies, launched a two-part application to, interdict the implementation of Eskom’s Interim Grid Capacity Allocation (IGCA) rules, which came into force on June 27, as well as to have the rules reviewed and set aside based on their alleged illegality under the Promotion of Administrative Justice Act.
Eskom revised its grid rules following Bid Window Six (BW6) of the public renewables programme, when none of the 23 wind projects vying for a 3 200 MW allocation, were able to advance to preferred-bidder status after it emerged that budget quotes for the same grid capacity on which the projects were bid had, instead, been allocated to companies pursuing bilateral contracts with private off-takers.
The IGCA framework unveiled on June 27 replaced the previous ‘first come, first served’ approach with a ‘first ready, first served’ model, which Eskom said was necessary to ensure that only shovel-ready projects were granted grid capacity in a context of severe grid scarcity in certain regions.
The initial industry response was cool but it was indicated that engagements would continue and that further adjustments might be made in future to accommodate the concerns raised by independent power producers. On July 17, however, G7 Renewable Energies launched an application in the Gauteng High Court to interdict the implementation of the IGCA and to have them declared illegal.
During a briefing to provide an update on the progress the government was making to implement the Energy Action Plan, the Presidency’s Rudi Dicks confirmed that the government was aware of the legal challenge and stated that if the interdict was granted, it would create a problem. He also noted that, while Eskom and the government were aware that concerns had been raised about the rules, there had already been efforts taken to address these issues.
One of the renewable energy companies, Red Rocket, has come out in support of the power utility. In an open letter, Red Rocket CEO, Matteo Brambilla affirmed their support for the intention and principles behind Interim Grid Capacity Allocation Rules (IGCAR) and its willingness to collaborate with key stakeholders to strengthen South Africa's Energy Grid allocation efforts:
Red Rocket, a leading independent power producer in South Africa wishes to express its support to Eskom for its efforts in effecting the Interim Grid Capacity Allocation Rules (IGCAR) and all key stakeholders involved, including the esteemed Presidency, the National Energy Regulator of South Africa (NERSA). We firmly believe that IGCAR is a vital stop-gap initiative that will pave the way for a more comprehensive and strategic set of final rules, and ultimately a more resilient and sustainable energy future for the South African public.
At Red Rocket, we recognise the critical importance of a stable and efficient energy grid to support the growth and development of the South African economy. IGCAR represents a significant milestone in achieving a fair and transparent allocation of grid capacity, fostering a level playing field for all energy producers, and facilitating access to electricity for various industries and households across the country.
We stand united with Eskom in its efforts to bolster grid capacity and provide reliable electricity for South Africans and more specifically its openness to continue to engage in the implementation of the IGCAR. To this end, Red Rocket has instructed legal counsel to bring an urgent application in the Gauteng High Court on Thursday 27th July 2023.
To join and support Eskom in the current proceedings attempting to interdict Eskom’s application of the IGCAR. Red Rocket is committed to playing its legal part in supporting the ultimate streamlining and enablement of a system that is a necessary stepping stone to where we ultimately need to be as an industry and as a country.
We firmly believe that the implementation of the IGCAR is a significant step towards accelerating and securing a brighter energy future for the South African public, who deserve a reliable and sustainable energy supply. To accomplish this, it will take cooperation from all energy stakeholders, even when the solution doesn’t meet all expectations. Our mission is to contribute meaningfully to the advancement of South Africa's energy landscape.
We extend our gratitude to all stakeholders, including the Presidency, NERSA, and Eskom, for their commitment and collaboration in shaping a brighter energy future for South Africa.