South Africa

Renewable Energy Fracas: Bid to halt signing of deals dubbed ‘misguided, abuse of court process’

By Melanie Gosling 26 March 2018

The 27 renewable energy companies selected by government to supply electricity to the country are losing R59.9-million each month as they wait for Eskom to sign power purchase agreements. This was said in court papers in a case that will be heard in the Pretoria High Court on Tuesday. By MELANIE GOSLING.

After a delay of more than two years, new energy minister Jeff Radebe announced earlier this month that government and Eskom would finally sign agreements with 27 independent power producers after Eskom had back-tracked on signing the contracts during 2016.

Days after the announcement, the National Union of Metalworkers of SA (Numsa) and Transform RSA lodged a late-night urgent court application in the Pretoria high court which sought to prevent Eskom from signing these agreements, saying that the extra renewable energy would mean Eskom would have excess generating capacity and would therefore have to close some of its coal-fired power stations. This could result in an estimated 30,000 job losses.

Numsa is taking action against Eskom, the Minister of Energy, the National Energy Regulator of SA (Nersa) and the 27 independent power producers. These companies were selected by government in two competitive bidding processes in April and June 2015 to build wind and solar power stations.

Numsa also argues that the signing with Eskom would be unlawful as Nersa had not taken certain decisions it was legally required to do before the contracts could be entered into.

Nersa has denied this in court papers, and is opposing the application.

The Department of Energy said in papers that the court application was “misguided and an abuse of the court process”.

It said the current excess of energy would be temporary with the projected economic growth from new investor confidence.

The department said that the introduction of renewable energy had nothing to do with some coal-fired power stations shutting down. Power stations had 50-year lifespans and a decision had been made years ago that between 2020 and 2026, six old power stations would close – and would do so even if there had been no renewable energy added on to the grid.

It said the new Medusi and Kusile coal-fired power stations have created a large number of jobs.

The first three phases of renewable power stations being built had created 27,775 jobs during construction and 6,729 during operation.

The 27 proposed renewable power stations, which have been stalled, will create 58,419 full-time jobs during construction and operation.

The renewable energy programme obliges companies to invest in local communities, who are expected to get R29-billion in dividends, R20-billion in social-economic development and R6.4-billion in enterprise development.

The department said the cost of buying electricity from independent power producers would not be a cost to Eskom, as it was one that would be “passed through”.

Of the R30.9-billion Eskom has got from consumers under the MYPD3, the department said, Eskom had spent only R39.9-billion in payments to the existing independent power producers in the 2016/17 financial year.

Eskom thus made a saving of R7.6-billion which had “helped alleviate some of its liquidity challenges”.

The independent power producers argue in papers that neither Numsa nor Transform RSA had not shown that they would suffer any harm if the interdict were not granted.

However, the 27 power producers, who have been waiting more than two years to sign contracts with Eskom, would suffer a great deal of harm with a loss of R59.9-million each month of delay.

In addition, “jobs are not created, suppliers’ factories lie idle, the environment loses the benefit of clean power generation, and investor confidence in South Africa continues to deteriorate”. DM

Photo: A general view at dawn of the Jeffreys Bay Wind Farm in South Africa 08 July 2016. Photo: Nic Bothma (EPA)


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