PRETORIA May 9 South Africa committed to buy
1,043 megawatts of renewable energy from independent developers
in the second stage of a programme to boost power supplies and
reduce its reliance on coal.
The government and state-owned power utility Eskom signed
agreements with power producers on Thursday for 19 projects
worth 28 billion rand ($3.1 billion).
This comes on top of the 28 projects already signed off in
the first stage of the clean energy drive, whose winners are
investing 47 billion rand to build 1,415 MW of clean power.
"It has been really a long, long road," Energy Minister
Dipuo Peters said at the signing ceremony.
"The success of this renewable energy procurement process
will lay the foundation for the participation of independent
power producers in power generation in South Africa."
South Africa hopes to use the programme to help create jobs
and economic growth as well as help alleviate chronic power
shortages as demand increases from its large platinum, gold,
iron ore and coal mining industries.
The signing of the agreements commits Eskom to buy the power
at a set price once the plants are built.
Developers must raise financing and build power stations
according to specific requirements, including sourcing the
materials locally. In the previous round some preferred bidders
had struggled to get their projects signed off.
Africa's largest economy depends on coal for 85 percent of
its electricity supply of around 41,000 MW, almost all of it
generated by Eskom. Two years ago it launched the process to
procure cleaner energy to reduce carbon emissions and bolster a
strained power supply.
The process of adding more renewable power to the grid and
having private players participate in generation has dragged on
for years, raising doubts about the government's ability to
deliver on its plans.
But progress made over the past year has won wide praise
from across the private sector and from bankers. The first
megawatts from the programme are expected to be operational in
November this year, while other plants are due by 2016.
Most of the projects are relying on financing from banks and
private capital, although Soitec, which is participating in the
renewable programme, successfully issued a 1 billion rand bond
last month to help finance its planned 44 MW solar plant.
The government hopes other developers will follow suit and
help create a new pool of energy financing in South Africa.
A third bidding round of the renewable drive is in progress.
($1 = 9.0107 South African rand)
(Reporting by Agnieszka Flak; Editing by Ed Stoddard and Jane