Moneyweb earlier reported that Eskom asked for exemption from the obligation to issue budget quotes to preferred bidders beyond round three of the renewable IPP programme. These quotes are for the cost of infrastructure needed for connecting to the grid.
The cost is for the account of the IPP, but the quote is a requirement for financial close and for reaching a power purchase agreement (PPA), which places an obligation on Eskom to buy the power these IPPs will generate, for the next 20 years.
Eskom has suspended the issuing of budget quotes until April 1 2018, apparently in an effort to avoid incurring this obligation. In its application for the exemption it said it needs a revenue guarantee from Nersa before it can proceed with the budget quotes.
Twenty-six preferred bidders have already been announced in round four of the procurement process, representing a total nameplate capacity of 2 205MW and investment commitment of almost R50 billion. These projects and all subsequent renewable projects could have been seriously at risk if Eskom’s application was granted.
Nersa’s electricity sub-committee rejected Eskom’s decision during its meeting on Tuesday. This is expected to be confirmed by the regulator itself during its meeting at the end of the month.
During the discussion Nersa chairperson Jacob Modise characterised the Eskom application as “cheeky”, equating it to blackmail. Modise said Eskom has to comply with its licence conditions, which include the requirement that it issues budget quotes within the prescribed timeline. He said the government could not allow all this renewable development and then allow this decision by Eskom.
Regulator member for electricity TT explained that Eskom’s current tariff application (MYPD3) that stretches until March 31 2018, made provision for renewable projects according to the planning in government’s Integrated Resource Plan 2030 (IRP2030) and the necessary revenue was approved.
As a result of Eskom’s generation deficit the Department of Energy however accelerated its procurement, which resulted in projects being developed earlier than was anticipated during the MYPD3 determination.