Response to City Press: Solar industry open to options after renegotiation directive

2017-09-11 19:25

The SA Photovoltaic Association (Sapvia) today distanced itself from comments that the minister of energy is bowing to pressure from Eskom to "squash" the renewable energy independent power producer purchase (reippp) programme.

City Press this weekend mistakenly attributed this comment from a board member of the wind energy association Sawea to Sapvia.

This has since been corrected.

Read: Fight or flight as Eskom 'squashes' renewable IPP programme    

Independent power producers affected by the minister of energy Mmamoloko Kubayi's recent call that they "renegotiate" their tariffs would have to "consider the various legal, financial, and credit risk implications on their projects", Sapvia said on Monday.

Kubayi announced on 1 September 2017 that the long-outstanding power purchase agreements with Eskom will be signed by the end of October - if previously agreed tariffs are lowered to 77c/kWh and other issues related to the management of community trusts are resolved.

"The Minister has recommended a price ceiling of 77c/kWh for all bids in Round 3.5 and Round 4 and the viability of this is currently under consideration by Preferred Bidder IPPs," Sapvia said in a statement.

 “The Minister also raised concerns with regard to the funding of the community trusts in these projects, and we believe that greater clarity over those concerns would assist in moving towards a resolution," said Sapvia Programme Manager Niveshen Govender.

Sapvia says that it will support the decisions of the individual Preferred Bidder IPPs once they have evaluated their positions and made a decision as to whether they are willing to proceed under the new conditions.

“We believe that the majority of the IPPs are willing to offer more value and engage openly and honestly with the Department of Energy and the Independent Power Producers office regarding the Minister’s statement, but ultimately the decision lies with each of them individually,” said Govender.

“There are a number of issues that each of the IPPs involved in these rounds need to consider before proceeding with financial close. These include the obvious financial considerations of a lower price, the overall legitimacy of the process, and the risk of legal challenge after closure."

Govender says that it would be a “disaster” if the agreements were challenged after signing the PPAs.

"If there is a decision to be made, it needs to happen soon because the validity of those bids expire at the end of September” said Govender.

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March 18 2018