South African Wind Energy Association (SAWEA) CEO Brenda Martin on Friday asserted that the renewables sector has proven its capacity to take on upfront risk and to contribute to broader national development objectives such as job creation, social development and providing new opportunities for economic ownership.
In response to a statement issued by the National Union of Metalworkers of South Africa (Numsa), issued on Thursday, in which the union expressed its opposition to renewable independent power producers (IPPs) and the proposed unbundling of Eskom, Martin pointed out that the “renewable energy sector is currently four times more employment-intensive than the country’s coal and nuclear sectors, as confirmed by the Department of Energy”.
“The renewables sector has consistently achieved and gone beyond compliance, despite the policy uncertainty created by stop-start procurement in previous years,” she added.
SAWEA believes the country’s energy transition needs to be managed with much more care by all social partners to ensure that negative effects, particularly on people, are minimised.
The association also pointed out that owners and operators of coal-fired power stations should take primary responsibility for ensuring social plans are in place to address the consequences of plant and mine closures.
Numsa on Thursday said its national executive committee decided to embark on a rolling mass action through a declaration of Section 77 in defence of Eskom; and called for unity among all workers across various sectors of the economy.
The union indicated that the current liquidity crisis confronting Eskom was self-generated by the current government, as demonstrated by a number of factors.
It listed these as being government’s signing of power purchase agreements with IPPs despite the fact that Eskom had enough capacity when the actual demand in the economy was on a decline; and doing so without the National Energy Regulator of South Africa (Nersa) having held public hearings.
Numsa highlighted that Nersa was governed by the National Energy Regulator Act, which dictates that every decision it takes must be consistent with the Constitution and be in the public interest.
Of the R8.2-billion generated in revenue through Nersa tariff increases, R6.5-billion went to the IPPs. Such a decision went against the interest of Eskom and, as such, Eskom’s equity was eroded and its profits were depleted, Numsa posited.
Numsa averred that the biggest beneficiaries of the IPPs were the banks and the owners of the IPP projects, owing to profits earned off the tariff structure with a return of 17% on equity on bid windows one and two of the Renewable Energy Independent Power Producer Procurement Programme
The union refuted claims that the renewables programme constituted a “pass through” cost, citing that Eskom’s costs are passed through and are carried and paid for by the consumer.
Moreover, it said that, as 60% of South Africans earn less than R4 200 a month, the costly IPPs constitute an attack on the majority of South Africans who cannot afford electricity owing to the high tariffs.
While Numsa affirmed that the press conference held by African Rainbow Energy and Power (AREP) chairperson Patrice Motsepe earlier this month had sought to deal with what is perceived to be a conflict of interest in the IPP space, it nevertheless pointed out that bid window four projects, which were signed off by his brother-in-law and Energy Minister Jeff Radebe within seven days of his appointment, contained projects that were to the benefit of AREP, namely the Kangas and Perdekraal projects, part of the 27 IPPs listed on the AREP website.
Numsa claimed that, over and above its view that IPPs are a problem for Eskom and the consumer, there was no fair procurement process in awarding IPP contracts.
The union is demanding that government must agree on the appointment of an independent commission in consultation with all stakeholders – labour, government, business and civil society – to investigate the IPP procurement process.
Further, it called on government to announce to the South African public who the owners and beneficiaries of the IPPs are.