GOVERNMENT will this month launch the long-awaited Refit programme that will make funding available to pay private energy entrepreneurs who will generate their own green electricity and sell it to the grid. That's the word from department of energy deputy director-general Ompie Alphane (correct), who was speaking on Friday (June 10 2011), the last day of the Eastern Cape Climate Change Conference, in East London.
Responding to questions from The Herald, Alphane said the Refit (Renewable Energy Feed-In Tariff) announcement would be made "sometime this month". He said the programme would be carefully controlled as it relies on government funding and this has to be kept affordable. The funding will be paid over to the successful Refit registered service provider in the form of a subsidy covering the difference between the price of a unit of Eskom grid energy (95 per cent of which is coal-fired) and the incentivised green price, to stimulate development of renewables, he explained.
"So, we recognise that the state cannot alone provide South Africa's electrification needs... but our Refit will not be an open anyone-can-come-get-it system.
"We're starting by making available R12-billion to procure a portfolio of 4000MW from renewables."
Alphane would disclose no further details as to what criteria will guide procurement, but the launch should nevertheless be the catalyst for a range of renewable projects that have already been prepared at risk. In the Eastern Cape, these will likely include wind farms which Alphane identified as showing strong potential here, as well as solar geysers and methane extracted from landfills, which NMBM is waiting to roll out.
Alphane said the necessity for a measured start on Refit will likely be overtaken "in four years time" when the price difference between an Eskom and a Refit unit of electricity will likely have been squeezed to nothing.
He emphasised that this will be taken cogniscence of when the department's Integrated Resources' Plan is re-evaluated, and this could happen as soon as "two to three years time".
The statement will please the pro-renewables' lobby and also the anti-nuclear groups who will be hoping that the multiplier effect of Refit, on the one hand, and the findings from Fukushima, on the other, will result in major changes to the existing plan, to better reflect their concerns.
Explaining the premise of the present plan, Alphane said it was based on the prerequisite of "keeping the lights on" and not reducing South Africa's industrial competitiveness.
The department's thinking was guided by the collapse of the Spanish economy, which occurred, he contended, because the tough carbon tax introduced there destroyed their competitiveness and a flood of renewables and green economy initiatives "displaced" existing enterprises.
The DDG noted that South Africa is in the top 15 worst emitters of CO2 in the world, despite our status as a "developing" country, primarily because of our reliance on coal-fired power. He also noted that serious consideration must be given to whether SA must continue to seek to attract foreign investment in energy-intensive smelters by offering them cut-rate power. "It is tantamount to exporting electricity."
Having noted these points, however, he said "we cannot wish away coal", and confirmed that construction of two new coal-fired power stations is underway.
When coal eventually has to go, he argued, nuclear is the only viable alternative, which is why it is "hard-wired" into the department's energy plan for South Africa, and why the government has committed to building two new nuclear plants (one of them at Thyspunt). They envisage rolling out a fleet of six of nuclear plants in total, raising by 2030 SA's nuclear energy generation from the 6% presently generated by Koeberg to 23%. But the department will hold off on this "until the full costs and risks are defined", he said.
Alphane said his department was convinced that there was a good business case for a gas-fired power station at Coega. Pressed further on this, he said perceived viability was not linked to the applications by multi-nationals to explore the Karoo using fracking, the highly controversial drilling technique, now under investigation, which land-owners and other groups are concerned will contaminate ground water.
"The gas for the proposed Coega plant would be imported. It would not come from the Karoo."
Asked for his comment, NMBM electricity department projects’ director Peter Neilson said it was very exciting news.
“It’s brilliant to hear.
“I think the Eastern Cape government should firstly be commended for organising this conference and getting someone like the energy DDG down here.
“What is going to be key now is what are going to be the rules of procurement? How are they going to choose which projects?”
Neilson said his hope was that the programme would focus initially on local government and the extensive work that has been done at this level to prepare for the Refit launch.
“My hope further is that their choices should be spread around the country and especially taken into account the poorer provinces like the Eastern Cape, as well as the big business hubs.
“In the NMBM, methane mitigation projects at two landfills and the Fishwater Flats sewage plant are well advanced, and PE as The Windy City also has the potential to showcase a major wind project,” he said.