Mineral resources and energy minister Gwede Mantashe says he will open a new bid window for projects by independent power producers (IPPs) of renewable energy as soon as the country’s energy’s regulator completes the final step in the regulatory process.
To procure energy, Mantashe must first make a determination under section 34 of the Electricity Regulation Act. Before this can be promulgated, the National Energy Regulator of SA (Nersa) must concur with the determination.
The determination is with Nersa, awaiting its approval, Mantashe said at briefing in parliament on Thursday.
Mantashe has been accused of dragging his feet in procuring more renewable energy, which has the shortest construction time for new build generation. SA faces an energy gap of 2,000MW to 3,000MW until 2022.
Whether critics believe he has been fast or slow in acting is a relative judgement on their part, said Mantashe. “I have explained to the president that what I have been resisting is to open a new bid widow using the old determinations. We have refused. When the section 34 determination is completed, the Integrated Resource Plan (IRP) will be implemented.”
The IRP is government’s long-term energy plan.
Mantashe, however, warned that a new round of renewables would not relieve load-shedding overnight as the new projects still need to be built. The quickest way to relieve pressure on the electricity supply is likely to be the conversion of diesel-fired turbines to gas, which he said could be done in 90 to 120 days.
“We are having that discussion. It will lower costs for Eskom and enable the turbines to be used outside peaking periods as well. This is one of the emergency measures we are looking at,” he said.
In December, Mantashe issued a request for proposals to fill the short-term energy gap with bids to be evaluated this month.
State-owned generation capacity
Mantashe said he is committed to liberalising the energy market, including the addition of state-owned generation capacity outside of Eskom, and would re-introduce the Independent System and Market Operator Bill (ISMO) urgently.
“The ISMO Bill was withdrawn in 2013 because it was ahead of its time. There was no energy market then, but there is now. I’ve looked at several models for transmission. The Chinese model and the Dutch model are two examples of a well-functioning transmission system. In both instances, transmission is owned by the state. Then they liberalised generation and distribution. To me I think that is the best model,” he said.
A proposal to cluster Eskom power stations to compete against one another then bid into the electricity market has been made by public enterprises minister Pravin Gordhan, he said. This, as well as establishing a state-owned generation capacity outside of Eskom, would be an important aspect of a liberalised energy market.
“We will make new generation outside of Eskom happen. There are indications of interest; for example, we have had offers to construct new power stations on a build, own, operate basis. We want it to happen,” Mantashe said.
More detail will be provided when the department presents its budget vote to parliament in May.
On the subject of the creation of a sovereign wealth fund, which President Cyril Ramaphosa announced in his state of the nation address (Sona), Mantashe said mines should not be taxed more; instead, royalties already paid should be diverted into the sovereign wealth fund.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.