ESKOM DELAYS THREATEN NEW RENEWABLE JOBS
19 December 2016
The South African economy is in jeopardy of losing 15 000 possible jobs associated with 26 Department of Energy-approved renewable energy plants, if Eskom does not follow through with its legal obligations to finalise power purchasing agreements (PPAs) with the private firms who have been earmarked to build and run these plants, according to the SA Renewable Energy Council (SAREC).
Since 2011, the DoE’s utility-scale renewable energy initiative – the Renewable Energy Independent Power Producer Procurement programme (REIPPP) – outsourced a sizeable amount of its energy infrastructure development to the private sector, a process which initiated the development of 92 privately-owned and run renewable plants. Through REIPPP, a series of solar power, PV, biomass, landfill, wind, and small hydro plants were set to feed 6 500 megawatts (MW) of power onto the grid. Since conception, half of these have been built and are already operational.
But the construction of the next 26 plants is on hold, as Eskom has delayed signing the contracts which set the price for how much it will pay for the power which these privately-owned plants will generate over the next two decades. This price has been subject to a competitive bidding process, and has been approved by the DoE.
‘Eskom’s refusal to sign PPAs despite this due process being concluded, has delayed indefinitely the financial closure of these plants, meaning construction cannot begin,’ explains SAREC chair Brenda Martin.
According to Martin, there are an estimated 13 000 construction-related jobs that could be lost in the next two years, if the building doesn’t go ahead. A further 2 000 operational jobs over the next 20 years are also at stake if Eskom does not sign these power purchasing contracts.
In addition, local economic benefits are at risk. SAREC, which represents solar and wind interests in the energy sector, also estimates that a combined investor value of R50 billion is hanging in the balance, as the future of these plants remains uncertain. This excludes the financial costs of ongoing delays.
Jobs in renewables: the big picture
REIPPP has been hailed for the speed of its rollout, its relative transparency in terms of financing and procurement, and for bringing the cost of solar and wind power down to well below that of new-build coal or nuclear.
A review of the programme by local infrastructure expert Prof Anton Eberhard, from the University of Cape Town’s Graduate School of Business, estimates that the total number of REIPPP-related jobs across all 92 projects is likely to be about 109 444 in total, with 84 564 going specifically to black South Africans, and 57 690 jobs for people living in the vicinity of the sites.
However, Worldwide Fund for Nature (WWF) maintains that more jobs may have been created during this stage than the government’s reporting indicates.
Doctoral-level social scientist and consultant Holle Wlokas, who wrote the WWF report, argues that the jobs implications are wider than just those that are linked directly with building and running of the plants.
‘The kind of enterprise development associated with these plants goes well beyond just what happens on the sites themselves,’ she explains. ‘During construction, you can expect an increase in demand for many different services in the wider community, as the local population swells with the influx of people associated with construction.’
Local hotels and related accommodation businesses and food retailers, for instance, will receive a boost in demand.
‘Hardware stores and people in the transport industry are also likely to see an increase in trade.’
This analysis doesn’t include the possible benefits for the informal sector, which helps keep money cycling within the local economy.
These downstream benefits are harder to measure and predict, says Wlokas, but shouldn’t be discounted when considering the implications of these plants not being built.
Most of these jobs are associated with the construction phase, which generally occurs in the first two years of a project. These usually result in unskilled work for local residents, and are temporary, but give necessary employment opportunities for those who might otherwise struggle to find work in economically stagnant communities. Operational jobs are usually more skilled, and are fewer in number, but are expected to last 20 years through the lifespan of the plants, which will be a further injection into local economies.
Eskom has not given an indication yet of when it plans to unlock the bottleneck by signing the power purchase agreements with the private firms.
- SAREC aim’s to promote the renewable energy sector in South Africa and represents a number of industry associations across a range of renewable energy technologies, like Wind, Solar and Biogas.
- SAREC comprises four industry associations, these are SAWEA, SAPVIA, SASTELA and SESSA.
Issued by: TM Communications
Issued for: SAREC
Issue date: December 2016