BuaNews (Tshwane)

31 August 2011

South Africa: Renewable Energy Production Must Create Jobs

Photo: Warrenski/Flickr
Investment in renewable energy will provide job opportunities, especially for those in rural areas where renewable power plants are located.

Pretoria — Job creation and the boosting of the local South African manufacturing sector are at the top of the agenda for the Request for Proposals [RFP] to procure renewable power producers.

"In the IRP up to 2016 for this request for proposals, what we would like to achieve out of this ... is we'd like key government imperatives like job creation and local manufacturing to be high up on the agenda," said the Energy Department's Director General, Nelisiwe Magubane.

According to the Integrated Resource Plan (IRP2010) - which is a 20-year projection on electricity supply and demand - about 42% of electricity generated in South Africa is required to come from renewable resources.

The department has put out a bidding process where it will look for proposals on new generation. It wants to procure 3 725 MW of renewable energy through this process.

"We really need to see some real benefits for South Africa. We don't want to see a situation where almost everything is imported and jobs are created elsewhere instead of this country. That is our point of departure when we requested these ... proposals from independent power producers," explained Magubane on Wednesday.

The Energy Department put up the RFP for download on 3 August.

"Indications so far are that we're receiving a more than expected response from possible bidders. We're hoping to finalise processes before the end of November," she said.

Under this programme, projects must be in the grid by 2016, with the first window closing in 2015 in respect of all technologies submitted by bidders, except for Concentrated Solar Power (CSP).

Ompie Aphane, the Acting Deputy Director General for Electricity, Nuclear and Clean Energy, said the department believed that solar power cannot exceed certain price caps.

The department would score bidders in relation to their contribution to economic development criteria.

"We do not look at price if you have not satisfied the scoring of economic development. If there is any breach to that, it could lead to termination of the contract."

Eskom would be the designated buyer of power. During the parastatal's application for a World Bank loan, there was 100MW of wind power, which is in the IRP and 100 MW of CSP allocated to the parastatal, which is in the tariff.

"So they are not going to be bidding at all. With regards to them lobbying government, they indicated that they would like to play in the renewable energy space. We are talking to them because we want them to indicate what will be the tariff implication of their involvement," explained the director general.

Allowing the parastatal to bid would be to indirectly fund it, said Magubane, adding that the department "wants to see some foreign direct investment."

Bidders have to pay a registration fee of R15 000 for access to bidding documentation.

"So far, we have received over 270 registered prospective bidders, which is the kind of response that gives us confidence that the market is receptive to what we have put out," said Aphane.

A scorecard has been put in place on issues such as what kind of jobs will be created, and also what kind of jobs will be created for historically disadvantaged people, as well as those who are skilled and rural development, among others.

On the question of the legality of renewable energy feed in tariff (REFIT) -- which was meant to attract investors (independent power producers) to new power generation going into the future -- the department said the problem with REFIT was that NERSA cannot predetermine a tariff in the absence of a license application. The regulator can only approve a tariff based on an application.

The regulation act requires the regulator to consider objections from the public in relation to the licensing process.

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