Wind energy producers lament Eskom’s surprise force majeure on their power output

By Paul Burkhardt

(Bloomberg) – South African wind energy producers questioned the legality of a decision by the state power utility to curtail purchases of their output, amid low demand caused by a nationwide lockdown to deal with the coronavirus outbreak.

The South African Wind Energy Association said Eskom’s decision to invoke force majeure in its contracts with the independent power producers caught them by surprise and was done without consultation. Eskom has said the producers will be compensated for lost revenue by having their contracts extended by the amount of time lost.

“The industry is seeking legal counsel on whether the reduced electricity demand as a result of Covid-19 does in fact constitute force majeure, as declared by Eskom,” SAWEA said on Wednesday in a statement. Some experts consider reduced demand as a normal system event that don’t give the utility the right to renege on its obligations, the association said.

South Africa has called for renewable energy producers and coal miners to lower their prices in order to help Eskom, which is struggling financially and was implementing intermittent power cuts before the lockdown began because it couldn’t meet demand. The three-week lockdown was instituted from midnight on March 26 to curb the spread of the coronavirus.

The industry will approach Eskom and attempt to resolve the issue amicably, according to SAWEA Chief Executive Officer Ntombifuthi Ntuli.

The force majeure notices serve to alert wind producers that Eskom may curtail their supply during the lockdown, the utility said on Wednesday in a statement. “Should this remote possibility happen,” the producers will be afforded one day of relief for every day, or part thereof, of lost production, it said.

South Africa has 22 operational wind farms that have a combined generation capacity of almost 2,000 megawatts, while another 12 are under construction.

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