Picture: ISTOCK
Picture: ISTOCK

BMI Research has warned of "downside risks" to SA’s renewable energy sector if the "disconnect between government and Eskom" persists.

The research agency, a unit of the Fitch group, has maintained its forecast for average annual growth in the sector of 13.1% over the next decade, and says it still expects just under 10GW of SA’s power supply to come from renewables by 2026.

Robust growth will be underpinned by growing investor interest, government policy and the falling costs of technology in the sector.

But BMI warns that investor interest could move elsewhere if Eskom and the government do not get onto the same page on the contribution of renewable energy to the national grid.

The Department of Energy’s latest integrated resource plan, released in November 2016 and covering the period up until 2050, provided for a greater role for renewable energy such as solar and wind power than the previous plan, which spanned the 2010-30 period.

Nonetheless, it drew criticism from the renewables sector, which said its envisaged use of renewable energy was too limited.

Eskom, meanwhile, caused confusion in July by saying it would not sign any new renewable power deals.

It is also pressing ahead with its nuclear procurement plans.

BMI Research said on Monday that it expected the government to maintain its support for renewable energy, since the sector had created 32,000 jobs and brought in R194.1bn in investment.

"That said, if the ongoing disconnect between the government and Eskom results in prolonged uncertainty with the REIPPP [Renewable energy independent power producer procurement programme]. and delays to new bidding windows being implemented, it will serve to dent investor confidence in the market," BMI warned.

"We could then see developers seek opportunities elsewhere, particularly as the investment climate for renewable energy improves in select markets across the sub-Saharan Africa region, notably in Kenya and Zambia."

Please sign in or register to comment.