State, power producers sign deal

The first contracts between government and independent power producers (IPPs) to add 1400 megawatts of renewable energy to the national grid were signed in Pretoria on Monday. Energy Minister Dipuo Peters said the signing ceremony with the 28 approved bidders for the so-called Window 1 was auspicious and presented various benefits for the South African economy, not limited to the energy sector. “Our government expects this programme to make a substantial contribution to the economy in various ways. It (the project) will provide greatly needed energy, with both measurable and immeasurable spin-offs, including job opportunities and skills development,” she said.

Window 1 describes the first round of bids sought in terms of the government's 20-year Integrated Resource Plan for renewable energy, including solar, wind, biomass, and biogas projects. It was estimated Window 1 would bring investment worth R47 billion into the energy sector, Peters said. The projects were not limited to particular provinces, in a bid to ensure all South African communities benefited, especially the poor. “I am proud to announce that the projects are spread across some of the most rural and least developed provinces, including the Eastern Cape, Northern Cape, Limpopo, North West, and Free State.

“Some of the IPP bidders have undertaken to set up community development initiatives that will uplift at least one community within a 50km radius of each project. Government is sure that local communities in the vicinity of the IPP projects will gain,” said Peters. The 28 applicants were appointed as preferred bidders in December 2011. Monday's signing of the contracts was expected to run past 8pm. The pacts being signed included power purchase and implementation agreements. Peters encouraged more women and blacks to participate in the plan in future. “I must indicate that I remain concerned about the level of women and black people participating in this programme,” she said.

“We will work with all relevant stakeholders to ensure the situation improves over the duration of the implementation of the energy plan.” Energy department director-general Nelisiwe Magubane said the plan was evidence of the government's dedication to clean, renewable energy. “Today the government has completed its part by entering into these agreements through the energy department. All eyes will now be on the (approved) bidders to show readiness as they commit to financial closure,” she said. Eskom's divisional executive Kannan Lakmeeharan said the parastatal could not meet South Africa's future electricity needs alone. “We welcome the involvement of the private sector to support the future needs of our country. We look forward to connecting these new producers to the grid,” he said.

In a statement earlier in 2012, the department estimated the full five-window bid process would attract proposals worth R100 billion. In October, Eskom applied for a 16 percent annual increase for five years in the price of electricity - from April 2013 to March 2018. Three percent of this was intended to support the introduction of IPPs.