South Africa’s leading renewable energy industry associations, representing the majority of developers of renewable energy projects, have urged Government to continue with the feed-in tariff, a policy mechanism designed to encourage the adoption of renewable energy sources.
In March, the National Energy Regulator, NERSA, unexpectedly issued a proposed review of the renewable energy feed-in tariffs (REFIT) that had been announced in 2009, a week before the first round of renewable energy procurement was widely expected to commence.
The review proposed significant reductions to the tariffs announced in 2009 and raised concerns that the procurement process would be delayed and investor confidence in the process would be undermined. This would also undermine the opportunity for government to showcase its commitment to renewable energy at COP17.
The renewable energy industry is concerned that such a significant tariff review, before even the first round of renewable energy is procured, could cause a severe blow to market confidence in government’s commitment to a fixed feed-in tariff which has a track record of ensuring investor security compared with other mechanisms. However, the tariff review would be a preferred option to any divergence to other approaches. At this stage it is paramount that the nascent industry is provided with consistency and certainty.
Fixed feed-in tariffs have proven to be the most efficient and effective support schemes for promoting renewable energy industries and their associated benefits of industrial development and job creation, and have been widely used in various developed and emerging markets to support renewable energy uptake and industry development.
It must be noted that any further delays will mean that South Africa will find it difficult to meet the renewable energy targets established in the Integrated Electricity Plan and will further compromise the security of supply of electricity in the country. They will also reduce South Africa’s chances of showcasing the country’s progress in renewable energy at the upcoming United National Convention on Climate Change Conference to be held in Durban in November 2011
The South African Wind Energy Association (SAWEA), Southern Africa Solar Thermal and Electricity Association (SASTELA) and South African Photovoltaic Industry Association (SAPVIA) have consulted extensively with a broad range of government stakeholders on the current status of the REFIT process to determine government’s commitment to continuing with a REFIT process.
“Although there has been no definitive statement made, it appears that post these engagements the majority of government stakeholders see no sense in deviating from the proposed REFIT processes and that a NERSA tariff review will not derail the REFIT process, but only potentially delay the planned procurement process,” said SAWEA chairman Mark Tanton.
The industry bodies are in agreement that the NERSA tariff review process must run its course and are confident that the procurement process will continue as planned after the review.
“In a recent letter sent to Energy Minister Dipuo Peters, we confirmed our industry’s support for the REFIT process and requested a meeting with the minister to facilitate more dialogue between industry and government,” said SAPVIA acting chairperson Chris Haw.
“As industry bodies collaborating to build a successful industry, we hope to meet with the Minister in due course with a view to continued constructive dialogue between industry and government,” said SASTELA chairman Pancho Ndebele.