SA Energy Department Signs Renewable Energy Agreements

Pretoria - Government has signed the first agreements with independent power producers (IPP) that will see 1 400 megawatts of renewable energy being produced to meet the country's energy needs.

The signing ceremony took place in Pretoria between government and 28 approved bidders from Window 1 of the Department of Energy's Renewable Energy Independent Power Producer Programme (REIPPP).

"This is an auspicious day for the government of South Africa, the African continent and the energy sector as a whole," said Energy Minister Dipuo Peters on Monday.

The names of the 28 approved bidders were announced in December 2011 during COP 17.

Window 1 of the REIPPP, which sought 1 400 megawatts of renewable energy, gave bidders (in wind and solar projects) until June this year to reach financial close. However, the date had to be moved due to issues including approvals by government institutions.

A total R47 billion is to be invested in the country through Window 1 of the REIPPP.

Peters acknowledged that over the course of time, several challenges were faced.

"We encountered criticism from those who were of the view that South Africa is not committed to cleaner forms of energy and that even if we were, we would never be able to deliver on this commitment," she said.

Although the majority of the bidders are foreign companies, 67 South African companies have formed partnerships with the foreign companies.

The 28 renewable energy projects are spread across some of the country's most rural and least developed provinces including the Eastern Cape, Northern Cape, Limpopo, North West and the Free State.

Some of the commitments the bidders have undertaken include community development initiatives around a 50km radius of each project.

The bidders have also committed approximately R1 billion to empower women bidders in the energy field.

"We will watch this [development] like a hawk," said Peters of the initiative.

She said the participation of black people in the projects was important as government did not want to have to call for transformation of the sector.

Additionally, the preferred bidders will also put around R2 billion towards socio-economic development.

"In total, these bidders will spend R12 billion over the duration of the implementation agreements on South African contractors, including empowered enterprises, small and women-owned businesses," said Peters, adding that this would address joblessness.

The minister again urged the bidders to stick to the commitments they have made.

"Bidders should be honest," she stressed.

Eskom executive Kannan Lakmeeheran said the signing ceremony was a significant milestone for South Africa, adding that the power utility could not meet the country's energy requirements on its own.

"There is substantial foreign direct investment out of this programme into South Africa which will have a positive impact on our economy. I am looking forward to the sod turnings," she said of the wind and solar PV projects that are expected to be integrated into the country's national energy grid during 2014.

According to the Integrated Resource Plan (IRP2010) - which is a 20-year projection on electricity supply and demand - about 42% of electricity generated in South Africa is required to come from renewable resources.

The IRP2010 places specific emphasis on broadening electricity supply technologies to include gas, imports, nuclear, biomass, renewables (wind, solar and hydro), in response to both the country's future electricity needs as well as reduce its CO2 emissions.