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Is this the dawning of the age of alternatives?

Posted by Laura Grant on April 1, 2009
Posted in Renewable energy

wind-turbines The renewable energy feed-in tariffs announced by the National Energy Regulator of South Africa (Nersa) yesterday appear to have been well received by industry players.

The tariff guidelines set the price renewable energy suppliers will be paid for  a unit of electricity and they need to be high enough to encourage investment in the industry. Until recently, renewable energy had to compete with South Africa’s incredibly cheap (but very dirty) electricity from coal. There were no incentives for renewable energy investors. So it’s not surprising that, at present, South Africa has only one operating wind farm which produces 5MW of electricity.

But in 2004 South Africa set a renewable energy target of 10,000GWh by 2013 and to meet this target it needs to kickstart the industry and get things moving quickly. The tarrifs announced yesterday are perhaps a sign of a commitment to increase the role of renewables in the energy mix. They are a significant improvement on those in the consultation paper released by Nersa in December, which had been criticised for being too low to encourage investment.

Under Nersa’s new tariff guidelines, developers will receive R1,25/kWh for wind (up 65c/kWh), 90c/kWh for landfill gas (up from 43c), 94c/kWh for small hydro (up from 73c) and R2,10/kWh for concentrated solar power (up from 65c).

To give you something to compare this to: on my January electricity bill, I was charged about 40c/kWh. But Eskom’s prices will increase and a levy on electricity generated from non-renewable sources is likely to come into effect sometime this year.

The power purchase agreement with suppliers will last for 20 years and the tariffs will be reviewed every year for five years and every three years after that. Eskom, the state energy utility, will act as the renewable energy power purchasing agency.

Don’t rush out to buy solar panels to generate electricity on your roof, though. The new tariffs don’t mean that ordinary households will soon be able to generate electricity from rooftop photovoltaics and get reimbursed for feeding it back into the grid. Nersa’s feed-in tariffs exclude photovoltaic panels and biomass generation. The regulator’s focus appears to be on utility-scale generation.

Consumers will most likely have to bear the increased cost of renewable energy – but at least we can look forward to some alternatives to coal and nuclear in the future.

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