Investors losing faith in South African solar, trade group warns

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Solar investors in South Africa are losing confidence in the country's market due to ongoing delays by the government to reveal successful bidders in the latest round of its national renewables procurement programme, claims South African PV Industry Association (SAPVIA) spokesman Wido Schnabel.

The country, which has been facing a nationwide energy crisis that has resulted in widespread blackouts, has had an announcement about the fourth round of the Renewable Energy Power Producer Procurement Programme (REIPPPP) on hold since the end of last year. Schnabel is now concerned that the government's perceived indecision could deter international investors.

The grid has been largely unable to support the rising demand for electricity, resulting in rolling blackouts, or what has been termed “load-shedding”. Schnabel believes that renewables are the solution to this energy crisis, stating that they are “the quickest way to get energy to the grid”.

The announcement of the fourth round is surrounded by speculation as the government has remained silent and has had little communication with businesses working under the REIPPPP. Neither Schnabel nor other companies contacted by PV Tech have any idea as to when an announcement will be made. The date has been pushed back multiple times, originally meant to be announced in November 2014, they have now stated the end of March, but industry members like Schnabel are not hopeful. “The last I heard was that they were going to announce [the fourth round] at the end of March… but they’ve said that before. My assumption is very little.”

According to Schnabel the delay was caused by a myriad of reasons. He told PV Tech: “I think the reason for the postponement is that they…are trying to see what they can do with the IPP to see what they can do to help the energy crisis. What I think happened in that discussion in the war room initially was that renewables weren’t featured but after a lot of lobbying…they have now listened to us and they understand that this is…the quickest way to get energy to the grid. I think that is a reason they postponed the announcement. They are looking to see how they can integrate it into round four and make it part of the five point plan being developed in the war room.”

In December, parliament was called to discuss the energy crisis and devised a five-point plan to be put into place by a ‘war room’ or the group of ministers whom the cabinet believed have a apart in the matter. This war room is headed by the deputy president, Cyril Ramaphosa.

Schnabel believes that the delay is negatively impacting the industry and causing investors to look elsewhere, stating: “It is really bad because a lot of IPPs [independent power producers] are losing trust in South Africa and the certainty of how to do business here, because you can’t live off of the uncertainties, and delay. I think we urgently need some certainty for the government. Even if they say, ‘we cannot tell you now, but we will tell you then’ or ‘we don’t have a solution now, but we will have a solution then’, people can plan according to that. But if you don’t talk at all and have no communication, then that is a little bit difficult for the industry…It is definitely a bad message to investors. You know, reliability on these kinds of programmes is key and investors are going into other regions where decisions can be taken quicker and people keep to their timelines.”

The programme has thus far had great results, including the instalment of over 1GW of solar in the grid. “It shows that the REIPPP programme and renewables can deliver on time, within budget, privately funded and can add daily to this energy crisis and alleviate huge expenses that they have.”

Other companies have remarked that they have been given no information as to the current or future state of the programme, and don’t expect to hear anything soon.

Despite the setbacks and lack of communication between the government and the people, Schnabel remains optimistic about the future of solar. While he hopes for an announcement soon, and worries about the impact of continuing the delay, he believes that “it is going to be a very exciting year for solar”.

According to Schnabel: “In terms of the south generation capacity, we have huge challenges, and the only one that can really help is solar because it’s technology that can…put the megawatts fastest into the grid…I think that the next three to five years are going to be really exciting in terms of what is going to happen in the South African grid.”

This article was amended from its original version to remove an incorrect time reference.

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