‘Proposed renewable tariffs too low to entice investors’
Thématique :
sud afrique
Potential renewable-energy investors and clean-energy lobby groups argued overwhelmingly on Thursday that South Africa’s proposed renewable energy feed-in tariffs (Refit) were parsimonious and would be insufficient to stimulate significant levels of investment into the nascent industry.
In submissions made to a well-attended National Energy Regulator of South Africa (Nersa) public hearing, held in Pretoria, speaker after speaker called for a material upward revision to the proposed tariff regime.
It was also strongly argued that the tariff-setting methodology employed was fundamentally undermined by the fact that Eskom refused to provide any transparency on its “avoidable costs”, visibility of which was viewed by some as vital for any appropriate tariff calculation.
The decision to exclude certain technologies, such as biomass and photovoltaic solar technologies, was also heavily criticised.
Most speakers also disagreed with Nersa’s assumption, contained in its recently released Refit consultation paper, that hydropower should play a leading role in meeting the country’s 10 000-GWh renewable-energy target by 2013.
The view was that South Africa’s available water resources were simply insufficient to meet the proposed 6 000-GWh contribution from hydro, while the lead-times needed to secure water and other regulatory approvals would be far longer than those involved for other technologies.
The hearings, which were scheduled to take place over two days, were chaired by full-time regulatory member: electricity Thembani Bukula and would entertain 20 oral submissions.
Bukula said at the start of the process that Nersa, which released its consultation paper in December, had since received over 100 written comments and inputs from a range of interested and affected parties.
He told Engineering News Online on the sidelines of the hearings that it was still hoping to have the Refit finalised by the end of February, but acknowledged that the overwhelming response to its paper and the public hearings might place pressure on that timeframe.
He stressed, too, that Nersa saw the Refit as a phased process and promised that other technologies would be included in the coming months.
But there were also a number of supplementary processes, particularly ones related to the rules of engagement for renewable investors with Eskom Distribution as the proposed renewable energy purchasing authority, which needed to be concluded.
But Bukula said that these processes should be concluded within six months and that he was hopeful that the finalisation of the Refit would stimulate serious licence applications for renewable projects in the coming months.
UNITARY VERSUS DIFFERENTIATED TARIFF
Another hot topic of day one was the benefit of a unitary as opposed to a differential tariff model.
In its paper, Nersa proposed a differential pricing regime for wind, hydro, landfill gas and concentrating solar, on a 15-year tariff schedule that would digress over time.
For instance, it proposed that wind projects receive a tariff of 65,48 c/kWh in 2008, falling to 57,84 c/kWh by 2013; that hydro developments enjoy 73,76 c/kWh declining to 71,69 c/kWh over the same period; concentrating solar power plants receive 60,64 c/kWh in 2008, falling to 57,67 c/kWh; and landfill gas projects receive 43,21 c/kWh, digressing to 40,75 c/kWh.
A number of the speakers, who ranged from wind and solar project champions, through to environmental-justice campaigners and investment bankers, called for a one-size-fits-all tariff model for the first phase, without digression, so as to set “a floor” for the initial roll-out of the Refit.
The prices proposed varied, though, from 95 c/kWh all the way through to a R1,85 c/kWh regardless of the technology deployed and the respective capital and operational costs involved.
This structure could be reviewed and “panel beated in flight” as the industry matured.
A number of the regulatory panel members, which apart from Bukula included Dr Rod Crompton, Dolly Mokgatle and Ethèl Teljeur, questioned whether such a model would be “fair and equitable” to the consumer, given that some technologies could make superior profits under a unitary tariff model.
There was also a fear that if tariffs were set too high it could encourage speculation, particularly around potential renewable-energy properties, and crowd out the potential benefits that could be garnered from the carbon-credit market.
But there were also many voices objecting to the factoring in of possible carbon-credit benefits into the financial viability of renewable projects.
Source
In submissions made to a well-attended National Energy Regulator of South Africa (Nersa) public hearing, held in Pretoria, speaker after speaker called for a material upward revision to the proposed tariff regime.
It was also strongly argued that the tariff-setting methodology employed was fundamentally undermined by the fact that Eskom refused to provide any transparency on its “avoidable costs”, visibility of which was viewed by some as vital for any appropriate tariff calculation.
The decision to exclude certain technologies, such as biomass and photovoltaic solar technologies, was also heavily criticised.
Most speakers also disagreed with Nersa’s assumption, contained in its recently released Refit consultation paper, that hydropower should play a leading role in meeting the country’s 10 000-GWh renewable-energy target by 2013.
The view was that South Africa’s available water resources were simply insufficient to meet the proposed 6 000-GWh contribution from hydro, while the lead-times needed to secure water and other regulatory approvals would be far longer than those involved for other technologies.
The hearings, which were scheduled to take place over two days, were chaired by full-time regulatory member: electricity Thembani Bukula and would entertain 20 oral submissions.
Bukula said at the start of the process that Nersa, which released its consultation paper in December, had since received over 100 written comments and inputs from a range of interested and affected parties.
He told Engineering News Online on the sidelines of the hearings that it was still hoping to have the Refit finalised by the end of February, but acknowledged that the overwhelming response to its paper and the public hearings might place pressure on that timeframe.
He stressed, too, that Nersa saw the Refit as a phased process and promised that other technologies would be included in the coming months.
But there were also a number of supplementary processes, particularly ones related to the rules of engagement for renewable investors with Eskom Distribution as the proposed renewable energy purchasing authority, which needed to be concluded.
But Bukula said that these processes should be concluded within six months and that he was hopeful that the finalisation of the Refit would stimulate serious licence applications for renewable projects in the coming months.
UNITARY VERSUS DIFFERENTIATED TARIFF
Another hot topic of day one was the benefit of a unitary as opposed to a differential tariff model.
In its paper, Nersa proposed a differential pricing regime for wind, hydro, landfill gas and concentrating solar, on a 15-year tariff schedule that would digress over time.
For instance, it proposed that wind projects receive a tariff of 65,48 c/kWh in 2008, falling to 57,84 c/kWh by 2013; that hydro developments enjoy 73,76 c/kWh declining to 71,69 c/kWh over the same period; concentrating solar power plants receive 60,64 c/kWh in 2008, falling to 57,67 c/kWh; and landfill gas projects receive 43,21 c/kWh, digressing to 40,75 c/kWh.
A number of the speakers, who ranged from wind and solar project champions, through to environmental-justice campaigners and investment bankers, called for a one-size-fits-all tariff model for the first phase, without digression, so as to set “a floor” for the initial roll-out of the Refit.
The prices proposed varied, though, from 95 c/kWh all the way through to a R1,85 c/kWh regardless of the technology deployed and the respective capital and operational costs involved.
This structure could be reviewed and “panel beated in flight” as the industry matured.
A number of the regulatory panel members, which apart from Bukula included Dr Rod Crompton, Dolly Mokgatle and Ethèl Teljeur, questioned whether such a model would be “fair and equitable” to the consumer, given that some technologies could make superior profits under a unitary tariff model.
There was also a fear that if tariffs were set too high it could encourage speculation, particularly around potential renewable-energy properties, and crowd out the potential benefits that could be garnered from the carbon-credit market.
But there were also many voices objecting to the factoring in of possible carbon-credit benefits into the financial viability of renewable projects.
Source
