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Energy minister’s new plans for electricity lauded

Energy Minister Tina Joemat-Pettersson on Thursday announced a raft of new plans for the acceleration of electricity generation by private-sector power producers, including the expansion of renewable energy programmes and progress on gas, coal and co-generation initiatives.

She also unveiled 13 winning bids for the fourth window of the renewable independent power producer programme (Reippp), with successful bids coming in at record-low prices that are competitive with the cost of coal-fired generation. Renewable energy has been considered expensive compared to traditional energy sources such as coal.

The announcement, coming near the end of a difficult week for Eskom, which was forced to resort to stage 3 load shedding due to unplanned outages and depleted diesel stocks, was met with an enthusiastic response by the business community, analysts and energy investors.

Martin Kingston, chairman of Business Unity SA’s energy task team, said: "This is real and material progress. We welcome all the announcements. The renewables that have been identified as well as the coal and gas potential procurements will bring much-needed capacity into the grid."

The Reippp is a success story. By introducing private-sector players into energy generation, it has mobilised substantial investment, with the prices that Eskom will pay on a steady downward trajectory. Including Thursday’s announcement, 5,243MW in projects has been approved over the past four years, mobilising private investment of R168bn.

While renewable energy is unable to provide base-load power and is variable, the construction of renewable energy generation has much quicker lead times than coal or nuclear.

Ms Joemat-Pettersson, who has been slow in commissioning power generation — the fourth-window bidders were supposed to be announced in November — said she "would leave no stone unturned" in accelerating the delivery of the new capacity.

In addition to the 13 successful bids, Ms Joemat-Pettersson said the Department of Energy would add two more bid processes before moving on to the fifth window in the second quarter of next year. First, another set of projects would be selected from fourth-round bidders that were not selected. As well as the "expanded round four", the department would allow "a reopener" to re-evaluate all unsuccessful bids from the four windows so far. From this, it intends to select projects with capacity for another 1,800MW.

After these added opportunities, the fifth window will be held in the second quarter of 2016.

The department is also designing a procurement programme for gas power generation and one for co-generation. A request for information for both is to be issued to the market this month. A request for proposals for coal independent power producers, issued last December will be adjudicated in June.

University of Cape Town Energy Research Centre director Harald Winkler said the 5,243MW from renewables was significant in the context of energy constraints. "While not all that will convert to kilowatt-hours, as renewables are variable, they have the quickest lead time. From the time of the award to the putting up of masts and solar panels is two to three years. Compare this to nuclear energy where the lead time is at least 10 years," Prof Winkler said.

Frost and Sullivan energy analyst Johan Muller said the announcement "was a breath of fresh air given the recent spate of negativity surrounding Eskom and the bottlenecks experienced in the Department of Energy".

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