Eskom wants review of green energy project

While Eskom said it remains committed to sign all of the remaining renewable energy independent power producer (REIPP) contracts under the current bid window, it reportedly backtracked on this pledge last week.

Eskom CEO Brian Molefe reportedly refused to sign an agreement for a government approved concentrated solar project with Acwa/Redstone in the Northern Cape last Wednesday. It was the second time he had refused to sign the agreement, signalling a move to disrupt the successful REIPP programme.

However, Eskom said this was not the case.

“Eskom has not decided to put on hold any renewable energy contracts,” said Eskom spokesperson Khulu Phasiwe on Monday in an emailed response.

“On the contrary, we have signed power purchase agreements with all successful bidders and we’re committed to sign all the remaining contracts under the current bid window 4.5 of the Department of Energy (DoE).

“All that Eskom has done was to write a letter to the DoE asking for clarity or a dialogue regarding the next contracting phase of independent power producers (IPPs) beyond bid window 4.5. That does not mean that a decision has been taken to abandon the IPPs.”

However, Business Day reported on Monday that by withholding this agreement Eskom had backtracked on its commitment to sign bid window 4.5 agreements and was therefore in defiance of government’s policy set by the DoE.

“Since July, (Eskom CEO Brian) Molefe and Eskom’s head of generation, Matshele Koko, have objected to the arrangement, as it means that they are obliged to buy power from independent producers, even when it is not required by the grid,” explained Business Day deputy editor Carol Paton on Monday.

“This is especially so with renewable energy, which is available only when the sun shines and the wind blows, and does not always coincide with peak-demand periods.”

Koko, Eskom’s group executive for generation, said in an opinion piece sent to Fin24 on Monday that over the next 20 years, R1.2trn in nominal terms is forecast to be spent on approximately 7 300 MW from co-generation, DoE peaker plants, renewables, the small renewable programme and bid windows 1 to 4.5.

“It is within this context that the chairman of Eskom (Ben Ngubane) has asked for a dialogue,” he explained. “He is merely exercising his fiduciary duties. Why is he being told to shut up? It is in the national interest to have this debate.

“Who stands to benefit when this debate is swept under the carpet? After all, the current expansion plan will bring unnecessary higher cost to consumers and will ultimately increase the cost of doing business in this country, impacting country competitiveness.”

Koko said the introduction of IPPs was partly based on the assumption that Eskom would only be able to build enough generating capacity by 2022.

“But through disciplined implementation of the plant maintenance programme, Eskom has been able to stabilise the power system, resulting in no load shedding in more than one year,” he explained.

“This turnaround is a game-changer. It will have a significant impact on the expedited IPP Bid Windows which are based on Eskom not being able to turn around its operations by 2022. It significantly improves the medium-term capacity outlook. Most importantly, it has a positive impact on the price that the consumer will pay for electricity going forward.”

Fin24

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Eskom wants review of green energy project