South Africa’s state power utility Eskom will sign purchase agreements with independent producers for 27 renewable energy projects next week that will generate 56 billion rand ($4.7 billion) in investments, the energy minister said on Thursday.
The minister was adamant that the signing of the 27 projects would go ahead on Tuesday with the full support of Eskom, President Cyril Ramaphosa, Finance Minister Nhlanhla Nene and Public Enterprises Minister Pravin Gordhan.
Terence Govender, chairman of the SA Renewable Energy Council, welcomed Radebe’s commitment to having the agreements signed.
This was announced yesterday by new energy minister Jeff Radebe.
It noted 37 preferred bidders from Rounds 3.5 and 4 should normally have signed PPAs with Eskom by no later than April 2016.
“Clearly the delay affected investor confidence”. These are old decisions of Cabinet. I’m ticking a box here. “It is the right thing to do”.
The 27 projects will create 61,600 full-time jobs, mostly during the construction period, and the focus will be on employing young people. “Northern Cape will have 59% of the jobs created, followed by Eastern Cape with 15%, and North West 13% of jobs created”, he said.
Part of the independent power producer’s obligations imposed by government is that each power station has to contribute part of its profits to the people who live within a 50-mile radius of the plant.
The minister also said the IPPs will enable local communities to further benefit directly from the investments attracted to the areas through the R9.8 billion to be spent on socioeconomic development initiatives, and R3.4 billion to enterprise development over the 20-year lifetime of the project agreements. The 27 projects include wind, solar photovoltaic (PV) and concentrated solar power (CSP) technologies.
The price of electricity generated by new coal-fired power stations is around R1.20 a kilowatt-hour.
The first connections to the grid from the projects are likely to take place in 2020, according to the head of the IPP Office in the Department of Energy, Karen Breytenbach.
South African Wind Energy Association CEO Brenda Martin was excited by the announcement, which she said provided policy certainty and would spur on the manufacturing sector.