SA’s renewable power plan runs into trouble

Author: Andile Ntingi

South Africa’s infant renewable energy industry appears to be running out of steam after a galloping start. The Renewable Energy Independent Power Producer Procurement Programme kicked off on a high note after being approved in 2011 and quickly attracted huge interest from investors, thanks to the generosity of state-owned power utility Eskom, which bought solar and wind energy from independent power producers (IPPs) at high tariffs in the early bidding rounds of the programme.

 

For a short while the high tariffs ensured impressive investment returns, particularly for solar projects. Since then investment returns on renewables have fallen sharply in tandem with tariffs due to aggressive bidding by IPPs to the point where uncompetitive industry players are being knocked out of the game, ending their participation in future projects.

 

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