Major milestone for IPPs and renewable energy in SA, but at what cost?

Chris Yelland, EE News 31 October 2012.

A significant milestone for renewable energy in South Africa was reached on 29 October 2012 when the minister of energy, Dipuo Peters, announced financial closure for some 1425 MW of renewable energy projects for the first bid window of the renewable energy independent power producer procurement programme…

… Dr. Wolsey Barnard, deputy director general at the DoE responsible for implementation programmes and projects, indicated that the average bid prices for the supply of energy in the first bid window for the various renewable energy technologies were:

Concentrating solar power (CSP):  R2,69 per kWh
Solar photo-voltaic (PV):               R2,76 per kWh
Wind:                                          R1,14 per kWh

He further indicated that the average bid prices for the second bid window were:

Concentrating solar power (CSP):   R2,51 per kWh
Solar photo-voltaic (PV):                R1,65 per kWh
Wind:                                           R0,90 per kWh
Small hydro:                                 R1,03 per kWh

Based on above, and the mix of renewable energy technologies planned in the national integrated resource plan for electricity, IRP 2010 – 2030, Eskom CEO Brian Dames has indicated that Eskom was being required to pay an average of about R2,00 per kWh for renewable energy from IPPs in the five year period from 2013 to 2018…

(Editor’s note: Eskom is now saying that the levelised cost of electricity from Medupi and Kusile is less than R0.71/kWh, which makes it cheaper than IPP wind at R0.90 to R1.14/kWh. However the R0.71/kWh is contested by 3rd party analysts (R1.20/kWh from UPE) and is lower than previous Eskom estimates of R0.97/kWh. Another factor to consider is how the proposed Eskom tariff increases compare to the allowed increases in the IPP Power Purchase Agreements. These, unlike Eskom’s tariffs, will probably be inflation linked. This information is not available at present and might remain confidential for commercial reasons.)

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