‘Outstanding PPAs to be signed next week’ – South African Energy Minister

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South African minister of energy Jeff Radebe, has announced that the project agreements of the 27 Renewable Energy Independent Power Producer Projects (REIPPP), including the power purchase agreements with Eskom, will be signed on Tuesday, 13 March 2018.

Radebe added that the decision has the full support of the President, Cabinet and the Ministers of Finance and Public Enterprises as well as Eskom.

“I would like to acknowledge them for their support throughout the process as well as the Development Bank of Southern Africa for their support, as our partner, to the IPP Office.”

The Minister made this announcement during a media briefing held in Cape Town earlier today.

Milestone Achieved

“We have reached this milestone following a long period of uncertainty but with this signing we are re-confirming government’s commitment not only to renewable energy, but also to a solid partnership with the private sector as we pursue our energy transition objectives in the future.

“As you have seen these last few years, a partnership with the private sector, labour and civil society, where we support each other in our different roles, is of really great benefit to our Country and the economy.”

According to Radebe, this initiative will mobilise R56 billion of new investment in the economy over the next 2 to 3 years.

This in turn will contribute to economic growth supporting the already positive achievement of 3.1% GDP growth in the quarter four, he noted.

“In a nutshell, these projects will provide 61,600 full time jobs of which 95% is for SA citizens, mostly during plant construction specifically with a focus on youth employment. Northern Cape will have 59% of the jobs created, followed by Eastern Cape with 15% and North West 13% of jobs created.

“The Renewable Energy Programme has empowered South Africans to own on average 48% of the equity in all of the Independent Power Producers (IPPs) projects. About 25% of the project equity is owned by foreign investors acting as a catalyst by providing investment and skills transfer to the establishment of the new green economy while enhancing opportunities for economic transformation of which the outcomes could clearly be seen in Bid Windows 3.5 and 4.”

Ministerial Requests

The Minister said that he has advised the Office of the Director General and IPP Office to immediately commence with the arrangements for signing of the 27 renewable energy projects, and by doing so, releasing the R56 billion investment to stimulate the economy, create the much needed jobs, advance the transformation agenda and further attract possible foreign direct investment into the Country.

Furthermore he has requested for them:

  1. To engage in the preparations to finalise all outstanding requirements for the signing of the 20 projects under the Small Renewable Programme (these are projects between 1MW and 5MW), which will have a substantial impact on a different market segment i.e. the creation of small businesses.This will immediately ensure a R2.7 billion investment in this part of the economy. To be noted is that our Development Finance Institution, the DBSA and the German Development Finance Institution KfW, have established access to affordable funds in support of the participation of small businesses in the green economy and therefore the Small Renewable Energy programme. We want to thank them for working with the Government and for their willingness in growing this very important market.
  2. I have requested the IPP Office to ensure a more equal distribution of the benefits to the communities specifically the distribution of the dividends by analysing and creating a better and more efficient structure for this purpose.
  3. To sign the 2 projects under Coal IPP Programme as well as the 19 projects procured under the Renewable Energy Expedited Bid Window, which will be announced in due course. Together this will achieve a further R103 billion of investment in the economy with substantial foreign direct investment.
  4. To facilitate the initiatives towards the development of a gas market, while exploring both indigenous and imported resources, as well as the related investment in infrastructure, particularly in collaboration with our neighbouring countries in Eastern and Southern Africa. I personally will lead a delegation to meet these countries to enhance the relationships for the mutual benefit of the people of the regions. I have tasked the IPP Office to take a lead in facilitating these initiatives, as matter of urgency, to ensure that South Africa speaks with one voice and prevent the confusion in the market and the region.
  5. Exploring optimal resource allocation and utilization in the energy-water nexus, among others, through knowledge-sharing and joint initiatives in our role as the Chair of the BRICS and SADC energy initiatives for the 2018/19 year.

Concluding Remarks

In conclusion, the Minister highlighted: “It should be noted that the total investment referred to above is from the private sector which indicates investor confidence in the South African energy sector as well as the economy of the Country.

“I have looked at the roll-out of the programmes announced above and I can assure you that connection to the grid will in accordance with the projected demand going forward taking into account decommissioning of old power plants.

“Furthermore the price in real terms of the IPP programmes remains constant over the period of the contracts – i.e. only CPI and below increases will be allowed, which gives certainty to the consumer.”