South Africa: Handy Push for Power Providers

The renewable energy industry got more than it bargained for when the National Energy Regulator of SA (Nersa) announced higher than expected renewable energy feed-in tariffs, paving the way for significant investments in this budding sector.

Given the high initial capital costs, potential investors in the renewable energy industry have been anxious about the feed-in tariffs, which determine the attractiveness of investing in wind, small hydro, landfill gas and concentrated solar projects.
Following a lengthy consultation process that included public hearings, representatives of the renewable energy industry made it clear that only a high tariff would get the sector off the ground. Without that, it became clear that the government’s plans for a 10000GWh renewable energy contribution to final energy consumption by 2013 would turn into a pipe dream.

Much to the industry’s elation, Nersa has released tariffs that, according to a World Wide Fund for Nature (WWF) SA statement, will galvanise investment in the sector. The tariffs for landfill gas, (90c/kWh) small-scale hydro (94c/kWh), wind (R1,25/kWh) and concentrated solar thermal power (R2,10/kWh) are guaranteed for 20 years.

Frost & Sullivan energy analyst Cornelis van der Waal says the tariffs are “way beyond” the industry’s expectations.

“They are much higher than the initial tariffs that Nersa proposed. In this case, the regulator has taken a bold step in terms of a Refit (renewable energy feed-in tariff) that is significantly higher than the price of coal-based electricity. This is a massive boost for the renewable energy (sector). We should see large-scale projects being announced in a couple of months.”

AllAfrica