Energy sector set to get R56bn investment boost
Investments worth about R56bn were set flow into the energy sector over the next two to three years, after the finalisation of power-purchase agreements for 27 renewable energy independent power producer (IPP) projects, Energy Minister Jeff Radebe said on Thursday.
The long-delayed signing off on the projects was scheduled for Tuesday, marking the government’s commitment to the renewable energy programme and to a solid partnership with the private sector. The signing would also bring policy and regulatory certainty for investors, said Radebe at a media briefing..
The average price agreed for electricity generated by the IPPs in bid window 4 is 86c per kilowatt-hour compared with the 77c which Eskom demanded. The 27 IPP projects will generate a total of 2,305MW.
The first connections to the grid from the projects are likely to take place in 2020, according to the head of the IPP Office in the Department of Energy, Karen Breytenbach.
South African Wind Energy Association CEO Brenda Martin was excited by the announcement, which she said provided policy certainty and would spur on the manufacturing sector. The majority of the 27 projects were wind projects. The two-year delay in the signing of the projects has been blamed on Eskom, which argued they were too costly.
In February, former public enterprises minister Lynne Brown announced that she had instructed Eskom to sign the projects, but nothing happened.
This was one of several promises of imminent signature, none of which materialised. Radebe said the delay had affected business confidence.
The minister was adamant that the signing of the 27 projects would go ahead on Tuesday with the full support of Eskom, President Cyril Ramaphosa, Finance Minister Nhlanhla Nene and Public Enterprises Minister Pravin Gordhan.
The projects would provide 61,600 full-time jobs, mostly during plant construction, with 59% being created in the Northern Cape, 15% in Eastern Cape and 13% in the North West.
Radebe said South Africans on average owned 48% of the equity of all IPP projects with about 25% being owned by foreign investors.
Radebe said he had given instructions to finalise all outstanding requirements for the signing of the another 20 projects under the small-renewable programme, which would ensure a R2.7bn investment.
To be announced in due course would be two projects under the coal independent power producer programme as well as 19 projects procured under the renewable energy expedited bid window.