In short, renewable energy feed-in tariffs mean that developers can invest in renewable energy, and sell excess energy back to the grid (Eskom) at a profit, a price more than it costs to generate, and guaranteed for a period of time, in this case twenty years. It’s a simple mechanism to counteract the hidden and externalised costs of nuclear and coal, and to balance the playing fields after all the subsidies those methods of energy generation have received.
This should result in a dramatic boost in renewable energy offerings here. Germany has used a similar scheme to kickstart solar energy, and even in cloudy Germany it’s been a huge success. A number of other countries have also just started on similar initiatives, or will be shortly, so South Africa is not among the first, but it is ahead of laggards such as the US and the UK.
This has been a rare success for the political process, emanating from what is apparently only the second ever private members bill. In South Africa, sadly, almost all bills are proposed by members of the cabinet, and parliamentarians jobs are merely to rubber stamp what’s been approved behind closed doors.
It’s no secret that South Africa’s shamefully loose legislation on genetically-modified organisms, for example. is in place largely due to the positioning of a few well-paid (and well-paying) agricultural lobbyists. Similarly, South Africa’s incompetent hemp trials have been a little too closely associated with people close to the cotton industry.
So well done to Dr Ruth Rabinowitz (IFP), Lance Greyling (ID), Judy Chalmers (ANC) and Gareth Morgan (DA) for bucking the trend, avoiding party politicking, and getting this to where it is today.
The devil’s in the detail, right, so how much are the tariffs? There was some early unhappiness about the disappointingly low proposed tariffs, especially considering the lack of excess energy capacity by conventional means, and the fact that Eskom already pays independent power producers R1.05 to R1.20 per Kw/hr, and even worse, pays an unbelievable R4 per Kw/hr to generate extremely dirty back-up power from open cycle gas turbines.
The figures announced are much higher than the original proposal, and look quite good.
The R1.25/kWh figure for wind is more than that offered in Germany and the proposed tariff in Ontaria. The even higher R2.10/kWh figure for concentrated solar (more often called concentrating solar power, or CSP), while not as much as offered by Spain, is great, as this is perhaps the technology offering the most potential, especially in South Africa, with a study finding Upington to be one of the best sites worldwide, and South Africa with potential for producing the lowest cost CSP worldwide.
This puts South African top of the list for CSP investors – a country with a serious energy shortage, possibly the cheapest CSP in the world, and a generous feed-in-tariff.
Coming shortly after Eskom put its nuclear plans on hold, the future is looking bright, shiny green!