South African energy sector to get US $4.7bn investment boost

Home » News » South African energy sector to get US $4.7bn investment boost

The South African energy sector is set to receive investments worth US $4.7bn over the next two to three years; this is according to South Africa’s Energy Minister Jeff Radebe.

This comes after the finalization of power-purchase agreements for 27 renewable energy independent power producer (IPP) projects.

The long-delayed signing off on the projects marked the government’s commitment to the renewable energy programme and to a solid partnership with the private sector. The signing would also bring policy and regulatory certainty for investors.

The average price agreed for electricity generated by the IPPs in bid window 4 is 86c per kilowatt-hour compared with the 77c which Eskom demanded. The 27 IPP projects will generate a total of 2,305MW.

Also read:Nigeria to cut power generation costs by 60%

According to the head of the IPP Office in the Department of Energy, Karen Breytenbach, the first connections to the grid from the projects are likely to take place in 2020,

South African Wind Energy Association CEO Brenda Martin was excited by the announcement, which she said provided policy certainty and would spur on the manufacturing sector. Majority of the 27 projects were wind projects.

Signing Projects

The minister was adamant that the signing of the 27 projects would go ahead as scheduled with the full support of Eskom, President Cyril Ramaphosa, Finance Minister Nhlanhla Nene and Public Enterprises Minister Pravin Gordhan.

The projects will provide 61,600 full-time jobs, mostly during plant construction, with 59% being created in the Northern Cape, 15% in Eastern Cape and an additional 13% in the North West.

On average South Africans own 48% of the equity of all IPP projects with about 25% being owned by foreign investors.

Furthermore, Radebe had given instructions to finalize all outstanding requirements for the signing of another 20 projects under the small-renewable programme, which would ensure a US $2m investment.