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ENERGY BACK ON TRACK

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Black participation and community development will be prioritised

An aerial view of the Droogfontein Solar Plant in the Northern Cape. Picture: Supplied

THE NORTHERN Cape is set to continue on its path towards becoming the renewable energy capital of South Africa, while creating more than 30 000 jobs, after the Minister of Energy, Jeff Radebe, announced that the outstanding project agreements of the 27 Renewable Energy Independent Power Producer Projects (REIPPP) would be signed tomorrow.

The bulk of the outstanding 27 projects, which include wind, solar PV and CSP, are earmarked to be constructed in the Northern Cape, which has over 60 percent of the preferred bid allocation.

Radebe yesterday said that the project agreements of the 27 Renewable Energy Independent Power Producer Projects (REIPPP), including the power purchase agreements with Eskom, will be signed tomorrow, “with the full support of the President Cabinet members, the Ministers of Finance and Public Enterprises, as well as Eskom”.

Radebe said the announcement was a milestone following a protracted period of uncertainty and the signing of the agreements would be “re-confirming government’s commitment not only to renewable energy but also to a solid partnership with the private sector in pursuing government’s energy transition objectives for the future”.

He added that the signing of the long-awaited agreements will bring much needed policy and regulatory certainty and maintain South Africa’s position as an energy investment destination of choice.

“This initiative will enable R56 billion of new investment in the economy over the next two to three years, which will immediately contribute to growth in the economy supporting the already positive achievement of 3.1 percent GDP growth in the quarter four,” he said.

He added that the renewable energy programme, which is aligned to the Paris agreement on the reduction of emissions as well as the South African environmental policy, would create thousands of jobs.

“These projects will provide 61 600 full time jobs of which 95 percent is for SA citizens, mostly during plant construction specifically with a focus on youth employment. The Northern Cape will have 59 percent of the jobs created, followed by Eastern Cape with 15 percent and North West with 13 percent of jobs created,” Radebe indicated.

“These programmes will contribute towards competitive market pricing of electricity, both for the household consumer as well as for industrial usage. This will be achieved firstly through the mere entrance of new and efficient market participants and secondly through the variety of sources for electricity generation. Lower electricity prices such as what we are experiencing with renewable energy generation will assist indigent households to cope with the rising cost of living,” Radebe said

He added that black participation and community development would be prioritised.

“It is anticipated that black participation is anticipated to increase not only at ownership level, but at operational level, and added that the construction and operation of the projects will eventually lead to the creation of black industrialists.

“Local community shareholding (equity share) in the 27 projects amounts to 7.1 percent (or R1.6 billion). The local community shareholders for the 27 projects will receive R5.9 billion net dividends over the 20-year lifetime of the projects.

“This will have a substantial positive impact on the living standard of the communities around these projects. Communities through Community Trusts have full control over how the money will be spent in their areas,” he said.

The Minister also said the IPPs will enable local communities to further benefit directly from the investments attracted to the areas through the R9.8 billion to be spent on socio-economic development initiatives and R3.4 billion to enterprise development over the 20-year lifetime of the project agreements.

“As part of the bid obligations, the Bid Window 3.5 and 4 Preferred Bidders have made commitments in five categories, namely, education and skills development, social welfare, healthcare, general administration and enterprise development.

“The majority of the money will be spent in the local communities around the projects and will also involve women-owned small businesses. It will ensure youth participation and development, whether through skills transfer and training, bursaries and/or the establishment of small businesses,” he said.

Engage

Radebe also said that he requested the IPP office to engage in the preparations to finalise all outstanding requirements for the signing of the 20 projects under the Small Renewable Programme (projects between 1MW and 5 MW), which he said “would have a substantial impact on a different market segment and contribute to creating small businesses”.

The South Africa Photovoltaic Industry Association (SAPVIA) yesterday congratulated Radebe on the announcement and said this would “bring much needed investment into our economy, as well as secure current jobs and manufacturing investments in the secto”.

“By confirming dates for the financial close of the Round 3.5 and Round 4 projects, government is sending out a signal that we have indeed reached a new dawn with the leadership changes under President Ramaphosa. This will revitalise long term investor confidence both local and international, investment and more specifically job creation and retention in this market. R58 billion of investment, more than 15 000 jobs and 2305 MW of energy added to the mix is only the beginning of what this industry can achieve,” SAPVIA said.