Alternative renewables funding to be considered as sector matures
Alternative funding models could be expected to begin coming to the fore in South Africa’s renewable-energy sector as the market becomes more competitive and domestic development finance institutions (DFIs) begin scaling back their direct involvement in projects.
This shift in strategy could have significant consequences, particularly in light of Energy Minister Tina Joemat-Pettersson’s decision that a further 6300 MW of renewables capacity be procured beyond the projects procured under previous government determinations. Standard Bank renewable energy, power and infrastructure head Rentia van Tonder believes the DFIs still have a significant direct role to play, particularly in providing equity finance, but also in supporting black economic empowerment community development.
However, in light of the changing environment she says different models could be considered in future, including options that seek to tap the debt capital markets. One possible alternative is the creation of so-called "yieldcos", which would be publicly traded corporations that hold operating assets that generate long-term, low-risk cash flows, which are distributed to investors as dividends.
Engineering News, 13 July 2015
Nuclear energy procurement process to start this month, budget not revealed
The procurement process for South Africa’s new build nuclear energy programme will start in the second quarter of this year and be completed by the end of the 2015 financial year. In an update on government’s nuclear procurement process, in Durban, DoE deputy director-general for nuclear energy Zizamele Mbambo said the first new nuclear power station would come on line in 2023. Government intended to build between six and eight nuclear power plants.
"Today, our economy is hungry for base-load electricity that is affordable," South African Nuclear Energy Corporation CEO Phumzile Tshelane said. He added that South Africa was building an income-generating asset that would not only pay for itself, but generate profits that would pay for other nuclear power stations to be built. However, the real value would be that the economy would no longer be hobbled by load shedding and thus able to function better. Although figures of ZAR1 trillion have been bandied about, Mbambo would not disclose government’s budget for the nuclear energy procurement programme, saying this would only become known once various vendors had put forward prices for specific projects.
Mbambo said government had conducted an Integrated Nuclear Infrastructure Review (INIR) in accordance with International Atomic Energy Agency (IAEA) guidelines. In terms of the IAEA guidelines, South Africa was required to amend its nuclear legislation and explicitly address fundamental safety principles, including assigning prime responsibility for safety to a specified operator. The amendment of the National Nuclear Regulator and Nuclear Energy Acts was under way.
Engineering News, 14 July 2015
Eskom explores equity stakes for contracts
Eskom confirmed on Tuesday that it would require its boiler serve contractors to give it a 30% stake in their businesses in return for orders, but insisted that this was not a non-negotiable condition. Eskom said the equity share by boiler serve contractors was part of the negotiation for the renewal of the contracts for April next year to March 2026.
Econometrix MD Rob Jeffrey said without knowing the details, he considered it would be "a surprising move" as it could restrict competition among suppliers for business being farmed out by Eskom and would not necessarily be the best use of Eskom’s assets. North West University Business School professor Raymond Parsons said this was a radical departure from current procurement policies and created new risks for companies doing business with Eskom.
"The intent of the equity stake is to allow Eskom the opportunity to improve plant and safety performance, providing greater insight in addressing the high level of unplanned boiler maintenance and enhancing skills transfer," the utility said.
Business Day, 15 July 2015