Lower demand, so Eskom kicks against Renewable IPPs. But silent on nuclear.

News that Eskom is now kicking against the independent renewable energy project is sure to raise fresh concerns among global investors. In each of the four auctions to date, the competitive bidding process has delivered a steady reduction in the price the country will pay to multinationals which have invested almost R200bn between them. With round five approaching, SA’s electricity supply monopolist is starting to whine. Where will it sell this “expensive” power, Eskom asks? Especially now that scarcity is over and power cuts absent for almost a year? Fair enough. But Eskom deserves no credit as its ability keep the lights on is a direct consequence of declining demand – itself flowing from massive tariff increases and the knock-on effect of local business’s investment strike. The real question Eskom should ask is with a hugely successful renewables project delivering the goods, what’s the point of the proposed nuclear build project. But given the Zupta influence on its board of directors, and all those lovely baubles nuclear power projects tend to bring for the politically connected, that’s a silly question. isn’t it? South Africa deserves so much better. – Alec Hogg  

By Paul Burkhardt

(Bloomberg) — South Africa’s state utility Eskom Holdings SOC Ltd. wants to discuss the future of the country’s program to procure power from private energy projects after almost a year without electricity cuts.

An Eskom sign stands outside the headquarters for Eskom Holdings SOC Ltd., South Africa’s state-owned electricity utility at Megawatt Park in Sandton, near Johannesburg, South Africa, on Wednesday, Nov. 11, 2015. A plan to reform state-owned power company Eskom Holdings SOC Ltd. and bring South Africa and its economy out of the dark is starting to show results, according to Chief Executive Officer Brian Molefe. Photographer: Waldo Swiegers/Bloomberg
An Eskom sign stands outside the headquarters for Eskom Holdings SOC Ltd., South Africa’s state-owned electricity utility at Megawatt Park in Sandton, near Johannesburg, South Africa. Photographer: Waldo Swiegers/Bloomberg

The Department of Energy is scheduled to hold its fifth auction for independent renewable power producers this year, after attracting at least 193 billion rand ($13.5 billion) of investment since 2011. Eskom Chief Executive Officer Brian Molefe has complained that the utility has to carry the burden of costly generation from those projects.

“We have committed ourselves to all the companies that the government has already contracted,” Khulu Phasiwe, a spokesman for the utility, said in a phone interview. “Now that we have some stability on the power system to the extent that we are now beginning to export capacity, what shall we do now?”

Read also: Maynard – Falling Eskom electricity production offset by independents growing

The utility has over the past 12 months averted the power cuts that previously hobbled Africa’s most industrialized economy and spurred the development of the IPP procurement program. Eskom Chairman Ben Ngubane wrote a letter to Energy Minister Tina Joemat-Pettersson, saying that the utility won’t sign further power purchase agreements without engagement over the issue, Johannesburg-based newspaper Business Day reported Thursday.

Joemat-Pettersson expanded the program last year and said a request for proposals for the fifth procurement round would be ready in the second quarter of 2016.

The Department of Energy and its IPP office didn’t immediately respond to e-mails seeking comment.

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