Government needs to urgently ensure the compliance of implementation agreements (IAs) related to Independent Power Producers (IPPs), Energy Minister Jeff Radebe said on Thursday.
Speaking at the Africa Oil & Power conference on Thursday, Radebe said South Africa’s Renewable Energy Independent Power Producer Programme (REIPPP) is a competitive tender process that has been designed to facilitate private sector investment into grid-connected renewable energy generation.
As part of the programme, bidders in the various bid windows are also required to sign standardised 20-year Power Purchase Agreements (PPAs) with power utility Eskom.
The PPAs are supported by IAs between the IPP and government through the Department of Energy, which, along with a Government Support Framework Agreement, effectively guarantees Eskom’s payments for the duration of the PPA, subject to IPP plant availability.
Radebe told the conference that IPPs are expected to comply with provisions of the IA from construction stage and throughout the period of the PPA.
“Critical to the IA are the commitments to empower local businesses and communities. This area is critical for government as it will stimulate development of the local renewable energy industry.
“Government acknowledges that monitoring of compliance with IA provisions needs urgent strengthening, as it has proven to be a challenge. Urgent work needs to be undertaken by our government to ensure compliance,” Radebe said at the conference held in Cape Town.
In April, the Energy Department announced the signing of an additional 27 projects procured under the REIPPP’s Bid Windows 3.5 and 4.
These 27 projects are located in different provinces throughout the country and include technologies such as solar photovoltaic (PV), wind, concentrating solar power (CSP) and biomass, among others.
“The procurement of the 27 new projects was the biggest IPP procurement by the department, representing a total of R56 billion of investment and about 2 300 MW of generation capacity to be added to the grid over the next five years.”
Radebe said new foreign and local direct investment expected from these projects should provide a strong economic growth impetus in support of the economy.
“Furthermore, it is expected that this investment will certainly have a positive effect and contribute to the much needed jobs in the rural areas of our country where these projects are located,” he said.