Lack of transformation in South Africa’s renewable energy sector

Thuletho Zwane 

Local and international investors, unions and black energy bodies all agree that renewable energy is critical for South Africa’s future power needs and that proper implementation of Renewable Energy programmes will lead to economic growth, jobs and empowerment. However, the major point of contention is how the transition from non-renewable energy to renewable energy should take form and who should be the primary beneficiaries of the transition.

In 2010, the Department of Energy (DoE), the National Treasury and the Development Bank of Southern Africa (DBSA) collaborated to set up the Independent Power Producer (IPP) office and designed the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). At the heart of the programme was the provision that Eskom, South Africa’s public  power utility, enter into Power Purchase Agreements (PPAs), ensuring that investors could forecast accurately their profits and bankability. Investors’ payment risk would be mitigated by government guarantee.