South Africa: Outstanding PPAs for solar, renewables to be signed by end of March

The SAWEA announced in a press release that the 26 outstanding PPAs related to wind, solar PV and CSP solar power projects selected in South Africa’s Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) program for large-scale renewable energy projects will be signed in the first quarter of this year.

“With all previous steps completed, we now await the final step in the process: Approval of the Minister of Public Enterprises so that the DoE can finally enter into power purchase agreements with the Preferred Bidders identified through due procurement process,” said the association’s CEO Brenda Martin.

The PPAs are related to renewable energy projects selected by the South African government in round 3.5 and 4 of the REIPPPP program. Of these projects, 12 are for large-scale solar plants totaling 813 MW, which were selected in round 4 only. The round’s winners were announced in April 2015, but the signing of the PPAs was delayed, due to the financial issues of South Africa’s power utility Eskom, which refused to award the PPAs.

In early September, South Africa’s Minister of Energy Mmamoloko Kubayi stated that the PPAs would be signed by the end of October, but she also said that the PPAs had to be renegotiated at not above 77 Rand cents ($0.063)/kWh. The government, however, missed two more deadlines it had set for the signing of the PPAs – one in late October and another one in November.

In September, South African consultant and PV expert Chris Ahlfeldt told pv magazine that solar may be the technology that is least affected by the renegotiation of the PPAs. According to him, in fact, the new price cap proposed by the DOE is about 20% lower than the average solar PV bid price of 96 Rand cents/kWh submitted in 2014, accounting for inflation.

For other renewable energy technologies, such as small hydro, biomass and CSP, instead, the original bid prices all exceed the price cap by 70% or more.

In April of last year, however, the South African Renewable Energy Council (SAREC), said that all of the issues related to the projects raised by the power utility have been addressed by the Ministry of Finance, the energy regulator NERSA and the Department of Energy.

South Africa’s PV capacity reached 1,474 MW at the end of December 2016, according to a report released by the country’s Council for Scientific and Industrial Research (CSIR). Bloomberg New Energy Finance believes South Africa is on track to install just 320 MW this year, which would represent a decrease of 13% on 2016.

Meanwhile, the South African Photovoltaic Industry Association (SAPVIA) unveiled in December a five point action plan, aimed at boosting solar energy development in the country by at least 1.5 GW per year.