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IOLProperty - South African Property For Sale
Wednesday Aug 29, 2012

Law stands between SA and cheap solar energy

The price of energy from solar photovoltaic (PV) cells has fallen 10 percent annually and will be at grid parity with Eskom by 2015. With Eskom's tariff set to double to 97.51c a kilowatt-hour by 2017, PV energy is expected to be cheaper than Eskom's coal-generated electricity by 2017.

This is according to calculations by David Lipschitz, an energy expert at energy company My Power Station.

PV energy is created by panels using solar radiation.

Lipschitz said at the Solar Power Africa conference in Cape Town yesterday that the cost of PV energy was sliding on excess supply of panels. "We could reach grid parity with Eskom even before [2015]."

However, this excess supply was not making its way to the national grid because electricity regulations in the country prevented those independent power producers (IPPs) not taking part in government procurement programmes from connecting to the grid.

Rules governing the country's electricity industry include the 1998 white paper on energy, the Electricity Regulation Act and its two amendments, as well as the Independent Systems Market Operator Bill.

Doug Kuni, the managing director of the SA Independent Power Producers Association, said the current laws caused uncertainty as they contradicted each other and this uncertainty jeopardised the financing of projects.

For instance, while the Electricity Regulation Act of 2006 allowed a willing-buyer willing-seller principle for electricity, the first amendment to the act excluded it. The latter also barred independent producers from selling power from private installations without ministerial approval.

"We need to make the environment easy for investors to come and we need certainty to achieve that," Kuni said.

Kuni said because so much uncertainty had been introduced, the only IPPs left in the market would be those that were part of the government's procurement programmes.

In the second window of the renewable energy procurement plan, the Department of Energy received 79 bids, of which 51 met the qualification criteria. But due to the limited capacity provided for this window, only 19 bid proposals were selected as preferred bidders.

Kuni said this was a clear indication that fewer IPPs could take part in the government's procurement programmes and therefore they wanted to be able to produce and sell the electricity privately, allowing customers a choice in supply.

With South Africa's power deficit estimated at between 5 gigawatts and 30 gigawatts a year, the IPPs said the government should allow independent players to cover this shortage because it was causing massive damage to the economy.

The challenges faced by local businesses, where they had to shut operations when Eskom was battling with household demand, were unnecessary and it was the reason the country was growing at a slower pace than other African countries.

"I don't see what's stopping the government and policymakers from saying 'we'll open the [bidding] windows until we've met the deficit when there are willing IPPs'," said Kuni.

Thembakazi Mali, a clean energy solutions manager at the SA National Energy Development Institute, said it would soon be cheaper to develop energy using solar radiation than fossil fuels because of Africa's sun exposure. If the continent took full advantage of this available resource, it could generate 80 times more energy than it needed.

But she said the market needed certainty on what was going to happen after window 5 of the renewable energy procurement programme for multinational companies to invest in local manufacturing.

Business Report

 
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