LAST MINUTE REVERSAL IN REFIT IS NOT CONSISTENT WITH LEGAL PROCESS.

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The REFIT promulgated by NERSA in 2009 in terms of the Electricity Regulation Act,  introduced a set of tariffs for different renewable energy technologies. The Minister of Energy, by requiring the first round of the REFIT to be awarded on the basis of tendering on price, rather than on a host of other competitive factors, has changed the law in the 11th hour. The repercussions of her decision are far wider than South Africa’s renewable energy program. They will have a bearing on our capacity to respond to climate change as per promises and targets set during negotiations at COP16 and they will reduce the country’s capacity to forge a strong renewable energy industry.

Response to climate change has two important components: Mitigation and Adaptation. The most effective way to mitigate against excessive carbon emissions is to reduce the quantity of electricity produced from fossil fuels. This requires a strong renewable energy agenda, such as the ones adopted in Germany, the UK, Ontario, Spain and a growing number of countries, all of which are chasing the fastest growing market in the world. As first demonstrated in Germany the REFIT is an important component to the development of that market, since it offers a fixed tariff over a period of time, provides financial certainty and transparency. Other countries with half hearted RE agendas have gone the route of tender, only to find that it is beset with delays, corruption charges, uncertainty and false pricing, which cannot be sustained and leads to problems down the line.

Many hearings and submissions have been made on the basis of the REFIT as a tariff. The change of heart by the Minister reflects the original goal of the government to call for tenders on renewables, in which case the Feed in Tariff should never have been introduced, although endorsed as a policy instrument by the ANC in 2006.

The last minute reversal of the tariff to a tender is not procedurally consistent with the legal process and the times required for consultation on policy and regulations. As companies stand in line for tenders, none is likely to launch a legal challenge, but these are sure to emerge when tenders are awarded, since millions of dollars have been spent preparing for the Feed in Tariff.

The hybridization of CSP, PV panels, wind, pumped hydro storage, biogas and biomass to provide base load electricity at prices competitive with Eskom becomes an ever closer reality. Spain’s first 24 hours operating concentrated solar power plant using molten salt for storage is an indication of what the future holds in store.  SA, with double the world solar radiation in some places, could commit unequivocally to a strong, transparent renewable energy path. But, with only 1023 MW of RE allowed for in the IRP (Integrated Resource Plan), the cap on generating capacity and the uncertainty related to tendering, we are moving back rather than forward.  Had the government’s desire been to kick start the RE agenda ahead of COP17, the adjusted tariffs by NERSA, with the REFIT as already adopted in regulations, would have been the ideal route. The current change of heart is difficult to comprehend.

Dr Ruth Rabinowitz (MB BCh)

The Democracy Foundation/MamaEarth

P.O. Box 437

, Rivonia 2128

T: +27(0)11 802 1826  F: +27(0)11804 4221

M 0825793698

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