The financial backers of South Africa’s independent power producers are reeling from Energy Minister Mmamoloko Kubayi recent apparent hit-and-run attack on them, according to City Press.
Last week, Kubayi announced they must all renegotiate their previously-agreed tariffs down to 77c/kilowatt-hour.
This announcement affects 27 projects representing at least R60 billion in capital expenditure.
The department of energy simply endorsed Eskom’s attempt to “squash” South Africa’s flagship public-private partnership initiative – the renewable energy independent power producer (IPP) purchase programme, Mark Pickering, managing director of solar industry lobby group Sapvia, told City Press.
National Treasury has R200 billion in renewable energy purchase programme guarantees on its books, even before the still unbuilt projects now being fought over enter the picture.
City Press contacted a number of the affected independent power producers this week.
All of them declined to comment outside the common position being formulated by their associations Sapvia and Sawea.
Andrew Johnson of Terraform, which has six renewable energy projects totalling about 400 megawatts in limbo, said they were “still drawing their conclusions” about last Friday’s announcement.
Another affected preferred bidder is Scatec Solar, which has three solar projects totaling 225MW waiting for power purchase agreements from Eskom.
The company said that, if its projects were online this year, the agreed tariff would be R1.05/kWh, meaning that Kubayi’s directive amounts to a 27% revenue cut.
The project that is the least likely to survive the “renegotiation” is the Redstone concentrated solar project in Postmasburg, Northern Cape.