BANKING ON CLEAN POWER

While the government’s plans to restructure the sources of South Africa’s power generation over the next decade are ambitious, lack of funds can constrain any ambition. But is seems as though the appetite for funding renewable energy projects in SA remains intact – even as several risks stwill linger.

The sector, if the government’s policy on energy gets put into action and moves forward, may prove a much-needed light at the end of the local economic tunnel. It may even potentially boost Eskom’s cash flow as well. But in order for this to materialise, the caveat remains: National Treasury must continue guaranteeing the power purchase (offtake) agreements signed with independent power producers (IPPs).

The appetite for renewables

Since 2012, funders forked out R192bn to invest in renewable energy, either through debt or equity investments over seven procurement bidding rounds (which included calls for large and small suppliers) until late 2016, according to an academic article by University of Cape Town Professor Anton Eberhard in the Journal of Energy in Southern Africa. Figures from the Renewable Energy Independent Producers Procurement Programme (REIPPP) show that financial commitments to these projects topped R209bn.

“If the procurement process and the underlying projects are well-designed, there should be sufficient long-term capital to fund the projects.”

This investment that took place has seen 6 422MW