BizCommunity Bruce Raw, GreenCape, 10 August, 2016.
The true impact of cancellations, delays and uncertainty around the independent power producer (IPP) and renewable energy programmes go much further than the energy sector. It puts at risk thousands of current and future jobs, a host of local manufacturing companies, community welfare and, most importantly, undoes what is arguably the most effective public private partnership model this country has ever seen.
Bruce Raw, Energy Programme Manager at GreenCape
Cheaper and cleaner
The direct benefits of the IPP programme are already clear for all to see. Since the inception of operations in 2014, CSIR figures show connected wind and solar PV facilities have contributed close to R5bn to South Africa’s economy, as a result of avoiding load shedding in 2014 and 2015 and diesel and coal costs.
Moreover, the inclusion of the private sector in developing major infrastructure such as generation facilities and upgrades to points in the grid, has relieved the public fiscus of spending over R37bn in construction costs (as of March 2016) with a projected total of R73bn (rounds one to four projects).
These are funds which could be diverted to supporting other socio-economic upliftment programmes across the country. It has further been projected that at the current, built-in South Africa prices combination of IPPs spanning renewable energy and liquefied natural gas will be both cheaper and cleaner than new build coal.
Investor certainty is crucial
The Renewable Energy IPP Procurement Programme (REIPPPP) has, over the past six years, attracted a total of over R194bn in investments, with over R53bn (27%) of this coming from foreign investors. This was achieved, in no small part, by creating investor certainty provided for in the REIPPPP. The effects of the current uncertainty created by Eskom’s statements and actions could be severe. If experience has taught us anything is that business does not like uncertainty.
A large independent wind blade manufacturer has already experienced delays and potential cancellations of its planned expansion into South Africa when the IPP was revised. Now, just as the company is seeking the go-ahead to set up a manufacturing plant in the country, we are once again beset by a lack of clear direction.
And this is not the only investment on the line. A combined investment pipeline from PV module manufacturers, earmarked for Atlantis, of close to R700m hangs precariously in the balance as we wait for clarity from the department and the incumbent.
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