Weekly projects and energy updates in South Africa

Exponential increase in the number of power generation projects

The African continent’s large energy deficit has resulted in an exponential increase in the number of power generation projects – both planned and implemented – as well as the number of stakeholders that are a consequence of renewed commercial interest in the African energy sector, says state-owned financial services provider Export Credit Insurance Corporation (ECIC).

There is an estimated 130 GW of suppressed demand across sub-Saharan Africa’s countries. As such, ECIC senior economist Tsidiso Disenyana – a panellist at the 2017 Africa Energy Indaba hosted at the Sandton Convention Centre from 21 to 22 February – explains that the continent has huge constraints in terms of energy supply and energy access, largely owing to high population growth, urbanisation and greater demand from emerging industries. As such, a number of power generation programmes have been introduced across the continent to address this ever-increasing demand.

Engineering News, 17 February 2017

Biogas needs favourable REIPPPP allocation for sustainable development

The measureable and sustainable development of South Africa’s biogas industry requires projects, and therefore a favourable Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) allocation to prove sufficient financial viable in order for financial institutions to provide the necessary funding.

Biogas organisation the Southern African Biogas Industry Association (SABIA) stresses that measuring the viability of biogas projects depends not only on an attractive return on investment, but also on the additional benefits, such as environmentally sustainable waste management, carbon mitigation, job creation and skills transfer, which can also contribute towards convincing decision-makers to implement such a plant.

Engineering News, 17 February 2017

Eskom yet to sign on renewable energy loans

Eskom is yet to sign loan agreements with the New Development Bank and the African Development Bank secured in 2016, both of which depend on a commitment to the expansion of renewable energy.

In both cases, Eskom says negotiations are on track and will be concluded shortly.

Last week, after a standoff of more than six months during which it said it would not sign any new agreements with independent power producers, Eskom said it would sign purchase arrangements with all projects already approved.

Business Day, 16 February 2017

Eskom starts electricity supply cuts to two Mpumalanga municipalities

As part of its ongoing campaign to recover outstanding debt from certain municipalities, state-owned Eskom will on Thursday interrupt electricity supply to the eMalahleni and Msukaligwa municipalities, in Mpumalanga.

The power cuts will affect the Doornpoort, Churchill, Kwa-Guqa, Witbank and Ermelo areas.

The interruption of supply as a result of non-payment remains an “agonising” decision and is a means of last resort, Eskom stated. “We take solace in the fact that we spared no effort to collect outstanding debts amicably,” it said.

Engineering News, 16 February 2017

Eskom renewables impasse over

The deadlock between Eskom and independent power producers (IPPs) appears to have broken, with several IPPs having received budget quotes from the power utility indicating what the cost will be of connecting them to the grid.

The quotes preceded President Jacob Zuma’s undertaking in his State of the Nation Address that Eskom would sign the outstanding power purchase agreements for renewable energy in line with the procured rounds. Eskom caused alarm in the sector in July 2016 when it said it would not sign on any more IPPs to the grid because of concerns about affordability.

Business Day, 13 February 2017

The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells.