Environmental Rights VS Economic stability
7 June 2018
In March of 2018, the Minister of Energy, Jeff Radebe, finally signed power purchase agreements with 27 Independent Power Providers (IPPs) on behalf of Eskom - the national electricity provider. These agreements should have been signed as far back as 2015, under the auspices of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). REIPPPP was launched in 2011 to encourage private investment and help in the development of the renewable energy sector in South Africa.
South Africa is particularly suited for renewable energy generation due to the abundance of wind for wind farms and sunshine for solar energy projects. In December 2017, the Department of Energy stated that since the commencement of REIPPPP in 2011, the country had attracted over R194 billion in investments. On 1 June 2018, Radebe announced a new round in REIPPPP, which could bring between R40 billion and R50 billion worth of investment to the sector. The delay in the signing of the agreements came from several avenues. Eskom resisted pressure from the State to execute the agreements, citing the high cost of procuring and producing renewable energy. Eskom also stated that it was operating at overcapacity, meaning that it was, and is, producing more electricity than demanded by consumers. This reasoning was used to suggest that there was, therefore, no need for alternative energy sources, much less more expensive ones.
In addition, a year ago, the Coal Transportation Forum (CTF) approached the High Court in Pretoria (High Court) to interdict the State from implementing REIPPP. Whilst the matter has not yet been set down, CTF argued in its submissions that the inclusion of IPPs in energy production would result in massive job losses in the sector, particularly for the working class, such as the coal truck drivers they represented. CTF further argued that REIPPPP would result in the abandonment of mining towns where closed coal stations are situated, creating ghost towns in places like Mpumalanga.
Shortly before the Minister signed the agreements, the National Union of Mineworkers of South Africa (NUMSA) and Transform RSA approached the High Court to block the conclusion of the agreements. They echoed CTF’s argument that the renewable energy producers would contribute to a rise in the price of electricity, (although the State opines that IPPs will influence competitive pricing) and that many jobs would be lost as collateral.