9 February 2017

South Africa: SONA - Zuma Commits SA to Renewable Energy

President Jacob Zuma committed to South Africa's continued investment in renewable energy as part of its overall energy mix.

Eskom has for months refused to issue final budget quotes to preferred bidders in Round 4 and the Round 4 extension of the Renewable Energy Independent Power Producer Procurement Programme.

It has caused widespread concern in the renewable energy sector, which had praised South Africa for years.

There are 26 preferred bidders across a range of technologies, none of which has reached financial close due to Eskom's refusal to sign further power purchase agreements, South African Renewable Energy Council (Sarec) chairperson Brenda Martin explained.

"These projects represent a combined value of R50bn in investment into the country that has been put on hold, which is ludicrous when considering our current economic climate," she said.

However, Zuma said planned investments in renewable energy will go ahead. "Renewable energy forms an important part of the energy mix, which includes electricity from gas, nuclear, hydro, wind, solar and coal," he said.

Zuma's utterance comes as the SA Renewable Energy Technology Centre at the Cape Peninsula University of Technology warned this week that the country's fledgling wind turbine service technician training programme will be "skilling its graduates for unemployment" if construction on the next round of state-commissioned wind farms doesn't begin within the forthcoming year.

Acting Eskom CEO Matshela Koko told Fin24 this year that renewable energy should be developed at a scale and pace the utility and country can afford - a line first used by Zuma in 2016 to explain the planned nuclear new build plan.

Sarec praises Zuma

Martin said on Thursday evening that Sarec is "very pleased to note the presidency's clear support for the country's Renewable Energy Procurement Programme (REI4P)".

"This globally recognised programme was the initiative of government, and it is fitting that the policy-maker's vision can continue to be realised.

"Industry appreciates the expressed support that key ministers have lent to the REI4P during the year-long impasse with Eskom.

"Some of the serious economic effects of the recent pause in South Africa's renewable power procurement programme such as factory closures and job losses have caused serious hardship for this fledgling industry. We trust that there will now be rapid movement to resolve the impasse in line with the President's directive," said Martin.

"This president's leadership can ensure that now much-needed direct and indirect investment and job creation is unlocked. More than R57bn investment will flow in the short-term and jobs will be created once outstanding power purchase agreements are signed.

"By 2014, investment into renewables in South Africa accounted for 84% of all foreign direct investment; a total sum of just under R200bn.

"Since 2016, while approximately R57bn worth of further renewable power investment had been secured under the programme in 2015, this sum has not entered the economy. In addition, up to 15 000 jobs associated with the power procured in 2015, are currently not being realised.

She said that through 6 bid windows the REI4P secured the following successes:

102 projects have been procured;

investments of R 194.1bn (of which R53.4bn from foreign investors)

64 projects have signed contracts representing 4 006 MW capacity of which 3051 MW was online (including early operation) as at 17 January 2017

Substantial jobs for South African citizens have been created (of which more than 47% are for youth)

Socio-economic development initiatives have been initiated in local communities

A green-industry has started to develop to the point that some manufacturers have become exporters of renewable energy plant components

Technicians are being trained at global standard ensuring that young graduates can service both the domestic and international market.

Source: Fin24

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