Bidders in the renewable energy programme in South Africa are going over their bids. This is to see if their projects will still be viable at 77c per kilowatt hour. This comes after an announcement two weeks ago, that Independent Power producers will have to renegotiate their previously agreed tariffs down to 77c per kilowatt-hour.
Ms. Mmamoloko Kubayi made the announcement. She is the Energy Minister in South Africa. The renegotiation must happen, if they want Eskom to sign power purchase agreements with them. She said the new power purchase agreements would be signed by the end of October.
The South African Photovoltaic Industry Association(SAPVIA) has issued a warning. The preferred bidders will need to consider the various legal, financial and credit risk implications on their projects. This should happen before signing them.
Mr. Niveshen Govender is the Programme Manager for SAPVIA. He says that there were a number of issues that each of the IPPs need to consider before proceeding with a final close.
Issues that each of the IPPs need to consider before proceeding with a final close.
- The overall legitimacy of the process
- The risk of legal challenge after closure
- Financial considerations of a lower price
According to Mr. Govender the decision will affect more than 70 bidders in the expedited round that followed round 4. He is also requesting the energy department leadership to communicate with projects which have not made progress in the past two years. He says that if there is a decision to be made it needs to happen soon. This is because the validity of those bids expire at the end of September.
The association said it would continue to support the decisions of the individual Preferred Bidder IPPs. Also they would continue to do what is best for the PV industry. This is once they have evaluated their positions and made a decision as to whether they are willing to proceed under the new conditions.
