Renewable Energy Feed Tariff: briefing by National Energy Regulator of South Africa (NERSA)
Date of Meeting:
24 Aug 2010
Chairperson:
Mr F Adams (ANC, Western Cape)
Summary: The National Energy Regulator briefed the Committee on the Renewable Energy Feed Tariff. The National Energy Regulator’s mandate was to regulate the electricity supply industry in South Africa established in terms of the National Energy Regulator Act 2004 (Act No. 40 of 2004). Part of this mandate focused on facilitating investment in the electricity supply industry and promoting the use of diverse energy sources and energy efficiency. The Committee was informed that the Renewable Energy Paper of 2003 set forth a 10-year target for renewable energy aimed at achieving a 10 000 gigawatts hour (0.8 Mtoe) renewable energy contribution to final energy consumption by 2013, to be produced mainly from biomass, wind, solar and small-scale hydro.
The National Energy Regulator further informed the Committee that the renewable feed-in tariffs were a pre-approved tariff for a specific renewable energy generation technology such as wind. Furthermore the term of the power purchase agreement was 20 years and independent power producers would apply for clean development mechanism revenues separately. The National Energy Regulator was finalising the rules on the selection criteria for the renewable feed-in tariff programme after a lengthy public consultation process. These would be forwarded to the system operator or the buyer who would then start the process by issuing a request for qualification and a request for proposals. The National Energy Regulator stated that all perceived regulatory risks had been mitigated and once the rules on selection criteria for the renewable feed-in tariff programme had been finalised, the buyer would be in a position to invite interested parties to bid before the end of 2010.
The Committee questioned the National Energy Regulator on how independent power producers would benefit ordinary citizens when independent power producers were again supplying their power to Eskom thereby adding further costs. The National Energy Regulator responded that the independent power producers benefited from supplying power to Eskom through a cost recovery mechanism as Eskom produced power at a lesser cost and was therefore able to reduce average costs. The National Energy Regulator was also asked if it was in a process to include other forms of energy such as wave and tide in its model. The National Energy Regulator explained that the renewable feed-in tariffs programme was mainly focusing on technologies that were tried and tested within South Africa; therefore nothing had been developed on wave and tide. The National Energy Regulator stated that it was very hopeful that the renewable energy programme would be a success. Members of the Committee were invited to visit the National Energy Regulator to see how the programmes were being undertaken.
The Committee questioned the National Energy Regulator on how independent power producers would benefit ordinary citizens when independent power producers were again supplying their power to Eskom thereby adding further costs. The National Energy Regulator responded that the independent power producers benefited from supplying power to Eskom through a cost recovery mechanism as Eskom produced power at a lesser cost and was therefore able to reduce average costs. The National Energy Regulator was also asked if it was in a process to include other forms of energy such as wave and tide in its model. The National Energy Regulator explained that the renewable feed-in tariffs programme was mainly focusing on technologies that were tried and tested within South Africa; therefore nothing had been developed on wave and tide. The National Energy Regulator stated that it was very hopeful that the renewable energy programme would be a success. Members of the Committee were invited to visit the National Energy Regulator to see how the programmes were being undertaken.
