Renewable Energy Council welcomes possibility of additional installations in REIPPPP round 3
10 December 2013:
The South African Renewable Energy Council (“SAREC”) today congratulated Government on its intent to consider allocating further contracts to potential renewable energy projects wanting to supply electricity to the national grid. The third bidding round of South Africa’s award winning Renewable Energy Independent Power Producer Programme has just closed. It was heavily over-subscribed. Given the excellent prices available from renewable energy producers, Government has indicated that it is considering enlarging the third bid window in order to procure additional electricity.
“Many renewable energy projects are now offering power at well below the cost of new coal”, said Mike Levington, former investment banker and presently a Board member of SAREC. “This means that the more the country buys at these prices, the more money is saved.”
Ntombikanina Malinga, also a SAREC Board member, agrees and adds: “The other significant aspect is that these projects hold no risk for the consumer. The prices are fixed and the country pays only for the electricity. Unlike traditional financing of conventional power, the consumer is completely unaffected should there be cost over runs or delays in the building process.”
James Shirley, Malinga’s co-Board member, points to the industrialisation potential of renewable energy in the country and says: “We are Government’s partner through the Green Economy Accord. Additional allocations now will send a clear message to investors that SA Inc is open for green business. The procurement ambition is steady over time, and if some clear and unambiguous definitions can be provided as what constitutes local content, as well as the importance of local content versus price, then companies can have the confidence to invest in manufacturing plants that service the burgeoning industry.”
Then there is the considerable contribution these projects make to job creation and community development in rural areas. “In some projects, communities have up to 40% ownership, all of which is financed in innovative ways that allow them not to pay upfront”, says Mark Tanton, SAREC Board member with extensive experience of the procurement process. “This model is set to create a new paradigm internationally and will bring relief far away from the cities, where it is urgently needed.”
The Government has indicated that a decision on additional allocations will be made before the end of the year.