The recent appointment of Jeff Radebe as new South African Energy Minister provided some promise that the uncertainty surrounding the Renewable Energy Independent Power Producers Programme (REIPPP) would be resolved.
The industry received a strong boost with the Radebe announcing that the 27 outstanding REIPPP projects from bid windows 3.5, 4 and 4.5 will be signed off on 13 March 2018. (The signing of 27 renewable energy agreements in South Africa has been halted till further notice).
The signing process will culminate in Eskom signing Power Purchase Agreements (PPA’s) with the 27 projects.
Although Eskom was not present when the Minister made the announcement, its spokesperson confirmed that a resolution to sign the PPA’s were taken at an Eskom Board meeting which was taking place at the time the Minister was making the announcement.
Concerns were previously raised about the average tariffs at which the PPA’s would be signed, with both both Eskom and relevant ministers indicating during 2017 that the PPA’s would only be signed at an average tariff of 77c/KWh.
It has now been confirmed that the average tariffs at which the PPA’s would be signed are 86c/KWh. The signing is expected to unlock ZAR56 billion of new investment and create 61 600 full-time jobs over the next few years, which has been mired in uncertainty since April 2015.
This announcement will provide renewed positivity and momentum into the REIPPP programme.
We however continue to believe that the early round projects remain attractive funding opportunities to investors due to the following:
Corneleo Keevy, Ashburton Investments Head of Credit Risk Management