Antoinette Slabbert
2 minute read
20 Oct 2015
12:00 pm

Eskom relents on renewables

Antoinette Slabbert

Eskom has committed to resuming the budget quotes "within a week" that will allow it to purchase power from new renewable energy projects, after a meeting with the National Energy Regulator (Nersa).

Picture: Thinkstock

Thava Govender, Eskom group executive of transmission and sustainability, made this commitment at the utility’s latest transmission development forum. The Transmission Development Plan (TDP) for the next 10 years was introduced at the event, but concern remains about its funding. The TDP provides for the construction of 99 969km of 765kV lines in the next 10 years, alongside 165 new transformers, 21 new capacitors and 21 new reactors.

Ahead of plan

Business earlier reported that Eskom had applied for exemption from issuing the quotes until March 31, 2018, when the current five-year tariff determination (MYPD3) expires. It said it needed a guarantee from Nersa it would be granted the revenue to pay for renewable energy from these projects, 26 of which – valued at R50 billion – had been fast-tracked ahead of Eskom’s budget plans.

Nersa, however, said such a guarantee was unnecessary and that Eskom should follow the legislated processes to access revenue. The revenue allocated by Nersa to Eskom in MYPD3 only includes money to pay for renewable energy projects up to the department of energy’s bid window 3. Eskom’s stance threatened to put government’s renewable energy procurement programme at risk.

Budget quotes are a prerequisite for financial close and the moratorium placed on them by Eskom since August 1 would delay financial close and construction. Govender said Eskom got a letter from Nersa on the issue on Friday and a speedy resolution was possible.

Eskom senior manager of infrastructure investment planning Leslie Naidoo said Eskom has successfully connected 42 projects with a total generation capacity of 2 142MW to the grid. About 88% were in operation. While the projects pay for the infrastructure needed for connection, Eskom has invested R2.4 billion in strengthening the grid accordingly.

Eskom senior manager of finance Ragini Ramkumar said it would cost more than R30 billion until 2025 to connect all Independent Power Producers (IPPs) – including new gas and coal IPPs – beyond bid window 3. That is included in the total of R213 billion for grid development for the next 10 years. R151 billion is needed to connect Medupi, Kusile, Ingula and the renewable projects up to bid window 3.

Transmission threat

Under-investment in transmission infrastructure threatens network reliability and load growth. The execution ability to accomplish the plan remains a challenge, he said.

Naidoo said Eskom would not reach the so-called N1-standard for grid reliability compliance on deadline. It may only be met in 2022/2023 if funds were available.