South Africa’s new energy minister postpones long-expected signing of 37 PPAs for solar and renewables

Newly appointed Minister of Energy, Ms Mmamoloko “Nkhensani” Kubayi.

South Africa’s newly appointed Minister of Energy Mmamoloko Kubayi has postponed indefinitely the deadline for the signing of 37 PPAs for large-scale wind and solar projects being implemented under the latest rounds of the country’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

According to the South African Renewable Energy Council (SAREC), the minister has not met the deadline for the signing of the PPAs set by the previous minister Tina Joemat-Pettersson for Tuesday April 11.

Mmamoloko Kubayi said that a new signature deadline will be announced after she has met with Minister of Public Enterprises Lynne Brown, with whom she intends to clear up issues raised by power utility Eskom.

The signing of the PPAs was pointed out as a priority for the country’s troubled energy sector by president Jacob Zuma in February. In its 2017 Budget Review, the country’s Ministry of Finance stated that Eskom “will sign outstanding power purchase agreements for renewable energy in line with procured rounds”.

“The Government is committed to the overall Independent Power Producers Programme, and we are expanding the programme to other sources of energy including coal and gas, in addition to renewable energy,” said Zuma in February.

SAREC said that all of the issues related to the projects raised by Eskom have been addressed by the Ministry of Finance, the energy regulator NERSA and the Department of Energy. “It is understood that Eskom’s obligation to pay for power procured, will only kick in once power plants are built and power is generated by IPPs,” said Brenda Martin, Chair of SAREC.

The REIPPPP program has suffered several delays over the past two years due to grid-connection issues and Eskom’s unwillingness to sign the PPAs granted under the program.

Eskom, which is the only entity in the country entitled to buy renewable energy power under the REIPPP program, was granted ZAR 23 billion ($1.75 billion) in funds by the government to help the company stabilize its precarious finances in 2015.

In mid-March, the French Development Agency (AFD) provided Eskom with a ZAR 6 billion ($477.7 million) credit facility. The utility said it will use the funds to improve its network and integrate more renewable energy power.