South African Renewable Energy Feed-in Tariff - Revision history

Ranisha at 16:28, 9 December 2015

2015-12-09T16:28:11Z

Lisafeldmann at 11:49, 30 June 2015

2015-06-30T11:49:44Z

Ranisha at 12:12, 31 March 2015

2015-03-31T12:12:19Z

Ranisha: /* Grid Connection and Licensing Procedures */

2015-01-29T15:36:56Z

Grid Connection and Licensing Procedures

Ranisha: /* Tariffs Set for the Included Technologies */

2015-01-29T15:36:19Z

Tariffs Set for the Included Technologies

Ranisha: /* Key Issues of Tariff Implementation */

2015-01-29T15:35:44Z

Key Issues of Tariff Implementation

Ranisha: /* Further Information */

2014-09-23T13:23:19Z

Further Information

Ranisha at 13:22, 23 September 2014

2014-09-23T13:22:29Z

Ranisha: /* Further Information */

2014-08-04T07:53:13Z

Further Information

Ranisha at 13:09, 7 July 2014

2014-07-07T13:09:14Z

@@ Line 1: / Line 1: @@
 = Overview =
@@ Line 186: / Line 185: @@
 <references />
 [[Category:Wind]]

@@ Line 2: / Line 2: @@
 = Overview =
-Implementing feed-in tariffs in a country is a political process, which involves many interest groups like electricity generating industry, financing institutions, renewable energy industry and non-governmental organisations. When a [[Feed-in_Tariffs_Wind_Energy|basic form of feed-in tariff]] is chosen according to policy objectives, many details (included technologies, amount of payment for different technologies, pre-qualification of projects for payment agreements etc.) have to be determined and tested. If the selected settings do not result in a development of renewable energy project, the tariff system has to be revised.
+Implementing feed-in tariffs in a country is a political process, which involves many interest groups like electricity generating industry, financing institutions, renewable energy industry and non-governmental organisations. When a [[Feed-in Tariffs Wind Energy|basic form of feed-in tariff]] is chosen according to policy objectives, many details (included technologies, amount of payment for different technologies, pre-qualification of projects for payment agreements etc.) have to be determined and tested. If the selected settings do not result in a development of renewable energy project, the tariff system has to be revised.
 As and example for the development and application of a new feed-in tariff system, this article describes the tariff concept in South Africa<ref>Contents of the article have been prepared by: Jonathan Curren, Liteboho Makhele, Andrew Jakubowski (Camco), Mike Goldblatt (PDG), Ole Langiss, Timo Basteck and Andreas Schiffner (Fichtner) for the Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ) and Western Cape Department of Environmental Affairs and Development Planning. The contents are part of concept for a Regional Regulatory Action Plan for the Western Cape and were published under the following title:fckLRGIZ / WES-KAAP (2009) Regional Regulatory Action Plan for the Western Cape – November 2009, retrieved 19.7.2011 [[http://www.gtz.de/de/dokumente/gtz2009-en-regional-regulatory-action-plan-western-cape.pdf]]</ref>.
@@ Line 60: / Line 60: @@
 <br/>
 === Tariffs Set for the Included Technologies<br/> ===
@@ Line 71: / Line 69: @@
 <br/>
-{| cellspacing="1" cellpadding="1" border="1" align="left" style="height: 261px; width: 859px;"
+{| align="left" cellspacing="1" cellpadding="1" border="1" style="height: 261px;  width: 859px"
 |-
 | <br/>
-| style="width: 513px;" | Technology
+| style="width: 513px" | Technology
-| style="width: 117px;" | tariff [Rand/kWh]
+| style="width: 117px" | tariff [Rand/kWh]
-| style="width: 124px;" | tariff [€/kWh]<ref>The exchange rate for the 19.7.2011 (9,8321 Rand = 1€) provided by the web-page 'finanzen.net'[[http://www.finanzen.net/devisen/euro-suedafrikanischer_rand-kurs]] was used to convert the tariff in €/kWh. The conversion allows comparison to other feed-in tariffs.</ref>
+| style="width: 124px" | tariff [€/kWh]<ref>The exchange rate for the 19.7.2011 (9,8321 Rand = 1€) provided by the web-page 'finanzen.net'[[http://www.finanzen.net/devisen/euro-suedafrikanischer_rand-kurs]] was used to convert the tariff in €/kWh. The conversion allows comparison to other feed-in tariffs.</ref>
 |-
 | rowspan="4" | Phase I
-| style="width: 513px;" | Landfill gas power plant
+| style="width: 513px" | Landfill gas power plant
-| style="width: 117px;" | 0,90
+| style="width: 117px" | 0,90
-| style="width: 124px;" | 0,09
+| style="width: 124px" | 0,09
 |-
-| style="width: 513px;" | Small hydro power plant (less than 10MW)
+| style="width: 513px" | Small hydro power plant (less than 10MW)
-| style="width: 117px;" | 0,94
+| style="width: 117px" | 0,94
-| style="width: 124px;" | 0,10
+| style="width: 124px" | 0,10
 |-
-| style="width: 513px;" | Wind power plant
+| style="width: 513px" | Wind power plant
-| style="width: 117px;" | 1,25
+| style="width: 117px" | 1,25
-| style="width: 124px;" | 0,13
+| style="width: 124px" | 0,13
 |-
-| style="width: 513px;" | Concentrating solar power (CSP) with storage
+| style="width: 513px" | Concentrating solar power (CSP) with storage
-| style="width: 117px;" | 2,10
+| style="width: 117px" | 2,10
-| style="width: 124px;" | 0,21
+| style="width: 124px" | 0,21
 |-
 | rowspan="5" | Phase II
-| style="width: 513px;" | Concentrating solar power (CSP) without storage
+| style="width: 513px" | Concentrating solar power (CSP) without storage
-| style="width: 117px;" | 3,14
+| style="width: 117px" | 3,14
-| style="width: 124px;" | 0,32
+| style="width: 124px" | 0,32
 |-
-| style="width: 513px;" | Biomass solid
+| style="width: 513px" | Biomass solid
-| style="width: 117px;" | 1,18
+| style="width: 117px" | 1,18
-| style="width: 124px;" | 0,12
+| style="width: 124px" | 0,12
 |-
-| style="width: 513px;" | Biogas
+| style="width: 513px" | Biogas
-| style="width: 117px;" | 0,96
+| style="width: 117px" | 0,96
-| style="width: 124px;" | 0,10
+| style="width: 124px" | 0,10
 |-
-| style="width: 513px;" | Photovoltaic systems (Large ground or roof mounted)
+| style="width: 513px" | Photovoltaic systems (Large ground or roof mounted)
-| style="width: 117px;" | 3,94
+| style="width: 117px" | 3,94
-| style="width: 124px;" | 0,40
+| style="width: 124px" | 0,40
 |-
-| style="width: 513px;" | Concentrating Solar Power (CSP) Central Tower with storage capacity of 6 hours
+| style="width: 513px" | Concentrating Solar Power (CSP) Central Tower with storage capacity of 6 hours
-| style="width: 117px;" | 2,31
+| style="width: 117px" | 2,31
-| style="width: 124px;" | 0,23
+| style="width: 124px" | 0,23
 |}
@@ Line 180: / Line 178: @@
 *[[Portal:Wind|Wind portal on energypedia]]<br/>
 *[[Portal:Solar|Solar portal on energypedia]]<br/>
-*[[South_Africa_Energy_Situation|South Africa Energy Situation]]
+*[[South Africa Energy Situation|South Africa Energy Situation]]
 <br/>
@@ Line 188: / Line 186: @@
 <references />
 [[Category:South_Africa]]

@@ Line 1: / Line 1: @@
 = Overview =
-Implementing feed-in tariffs in a country is a political process, which involves many interest groups like electricity generating industry, financing institutions, renewable energy industry and non-governmental organisations. When a [[Feed-in Tariffs Wind Energy|basic form of feed-in tariff]] is chosen according to policy objectives, many details (included technologies, amount of payment for different technologies, pre-qualification of projects for payment agreements etc.) have to be determined and tested. If the selected settings do not result in a development of renewable energy project, the tariff system has to be revised.
+Implementing feed-in tariffs in a country is a political process, which involves many interest groups like electricity generating industry, financing institutions, renewable energy industry and non-governmental organisations. When a [[Feed-in_Tariffs_Wind_Energy|basic form of feed-in tariff]] is chosen according to policy objectives, many details (included technologies, amount of payment for different technologies, pre-qualification of projects for payment agreements etc.) have to be determined and tested. If the selected settings do not result in a development of renewable energy project, the tariff system has to be revised.
 As and example for the development and application of a new feed-in tariff system, this article describes the tariff concept in South Africa<ref>Contents of the article have been prepared by: Jonathan Curren, Liteboho Makhele, Andrew Jakubowski (Camco), Mike Goldblatt (PDG), Ole Langiss, Timo Basteck and Andreas Schiffner (Fichtner) for the Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ) and Western Cape Department of Environmental Affairs and Development Planning. The contents are part of concept for a Regional Regulatory Action Plan for the Western Cape and were published under the following title:fckLRGIZ / WES-KAAP (2009) Regional Regulatory Action Plan for the Western Cape – November 2009, retrieved 19.7.2011 [[http://www.gtz.de/de/dokumente/gtz2009-en-regional-regulatory-action-plan-western-cape.pdf]]</ref>.
@@ Line 9: / Line 10: @@
 = South African Renewable Energy Feed-in Tariff =
-At the end of 2007, the [http://www.nersa.org.za National Energy Regulator of South Africa (NERSA)] commissioned the development of a '''Renewable Energy Feed-in Tariff (REFIT)''' for South Africa, under its authority to regulate electricity tariffs in the country. The feed-in tariff requires the Renewable Energy Purchasing Agency (REPA), in this case the Single Buyer Office (SBO) of the national electricity utility [http://www.eskom.co.za Eskom], to purchase renewable energy from qualifying generators at pre-determined prices<ref>http://www.google.de/url?sa=t&amp;source=web
+At the end of 2007, the [http://www.nersa.org.za National Energy Regulator of South Africa (NERSA)] commissioned the development of a '''Renewable Energy Feed-in Tariff (REFIT)''' for South Africa, under its authority to regulate electricity tariffs in the country. The feed-in tariff requires the Renewable Energy Purchasing Agency (REPA), in this case the Single Buyer Office (SBO) of the national electricity utility [http://www.eskom.co.za Eskom], to purchase renewable energy from qualifying generators at pre-determined prices<ref>http://bit.ly/1yvIoLA</ref>. These predetermined prices act as an incentive to renewable energy developers and private investors by reducing financial risk and providing market certainty.
 <br/>
 <u>The REFIT was finally launched in March 2009 and is aimed at supporting the government’s target of 10,000 GWh renewable energy in 2013 and promoting competitiveness for renewable energy with conventional energies in the medium and long-term. The key objectives of the REFIT are to:</u>
 *Create an enabling environment for renewable electricity power generation in South Africa;
 *Establish a guaranteed price for electricity generated from renewables for a fixed period of time that provides a stable income stream and an adequate return on investment;
@@ Line 46: / Line 40: @@
 <u>Phase 2 was published in October 2009, following public consultation, and includes the following additional technologies:</u>
 *biomass solid waste, however pulp and paper, bagasse and projects based on mill waste from industrial processes remain classified as cogeneration and presently excluded from the REFIT;
 *biogas through anaerobic digestion;
@@ Line 64: / Line 59: @@
 <br/>
 === <br/> ===
 === Tariffs Set for the Included Technologies<br/> ===
 The tariffs set out in the REFIT are generous when compared to international feed-in tariffs and cover the cost of generating renewable energy plus a ”reasonable profit” to encourage developers to invest. The tariffs are competitive globally and have been designed to take into account the higher risks associated with project development in a new environment, where there may be greater challenges in terms of finalising power purchase agreements and actually getting grid connection.
 The table provides the REFIT Phase 1 tariffs, which have been published and gazetted by NERSA and Phase 2 tariffs, which have recently been published.
 {| cellspacing="1" cellpadding="1" border="1" align="left" style="height: 261px; width: 859px;"
@@ Line 118: / Line 116: @@
 | style="width: 124px;" | 0,23
 |}
 <br/>
 === Key Issues of Tariff Implementation<br/> ===
@@ Line 129: / Line 128: @@
 Although the REFIT guidelines provide a basic structure for the implementation of the programme, further clarity is still required on key issues such as the pre-qualification criteria, licensing process, and fixed timelines in South Africa. Some of these issues are presently under discussion.
 *'''Pre-qualification criteria:''' This is still an issue which appears to be an ongoing debate and is of major concern to developers. In order to quantify the potential market and make sure only good quality projects are brought on line, it is understood that a pre-qualification process may be proposed as part of the REFIT application process. Although this issue has not been finalised, this could have the effect of discouraging a certain amount of investment in renewables and increasing risk to developers and investors. Experience in other countries in the establishment of FITs shows that certain parties, including utilities have also proposed combining a tender with a FIT, however this proved to be unworkable and was rejected. The integration of any tendering processes would also significantly increase the costs of project development and would also slow down the project development process. A decision on this issue is awaited.
 *'''Single Buyer Office: '''According to a Cabinet paper, the national electricity utility Eskom was appointed as the single buyer of electricity in the country, with both the right and obligation to buy power. The need for a single buyer is justified in this country due to the small power market in which the various players operate. At present, it is considered that the market in South Africa is not large enough or diverse enough to sustain multiple power buyers.<br/>In response to this, Eskom established the Single Buyer Office (SBO). Under the REFIT, Eskom’s SBO was appointed as the REPA.<br/>The office is instrumental in facilitating investment in renewable energy in South Africa and because the SBO is critical for the take-off of the renewable energy industry and is responsible for the power purchase agreements between Eskom and IPPs, many industry players are calling for its independence from Eskom.<br/>Although there is general agreement on the need for an SBO, there are concerns and questions about its impartiality since it is established within Eskom, and that it will not favour or support smaller power projects.<br/>It is understood that there are proposals and discussions to house the SBO externally to Eskom, however no decision has been made to date, although it is understood that a draft bill has been proposed to establish an independent System Operator.
@@ Line 138: / Line 138: @@
 <br/>
 ==== Cost Recovery and Capacity Cap ====
@@ Line 173: / Line 174: @@
 <br/>
 = Further Information =
@@ Line 178: / Line 180: @@
 *[[Portal:Wind|Wind portal on energypedia]]<br/>
 *[[Portal:Solar|Solar portal on energypedia]]<br/>
-*[[South Africa Energy Situation|South Africa Energy Situation]]
+*[[South_Africa_Energy_Situation|South Africa Energy Situation]]
 = References =
@@ Line 185: / Line 188: @@
 <references />
 [[Category:Wind]]

@@ Line 131: / Line 131: @@
 *'''Pre-qualification criteria:''' This is still an issue which appears to be an ongoing debate and is of major concern to developers. In order to quantify the potential market and make sure only good quality projects are brought on line, it is understood that a pre-qualification process may be proposed as part of the REFIT application process. Although this issue has not been finalised, this could have the effect of discouraging a certain amount of investment in renewables and increasing risk to developers and investors. Experience in other countries in the establishment of FITs shows that certain parties, including utilities have also proposed combining a tender with a FIT, however this proved to be unworkable and was rejected. The integration of any tendering processes would also significantly increase the costs of project development and would also slow down the project development process. A decision on this issue is awaited.
 *'''Single Buyer Office: '''According to a Cabinet paper, the national electricity utility Eskom was appointed as the single buyer of electricity in the country, with both the right and obligation to buy power. The need for a single buyer is justified in this country due to the small power market in which the various players operate. At present, it is considered that the market in South Africa is not large enough or diverse enough to sustain multiple power buyers.<br/>In response to this, Eskom established the Single Buyer Office (SBO). Under the REFIT, Eskom’s SBO was appointed as the REPA.<br/>The office is instrumental in facilitating investment in renewable energy in South Africa and because the SBO is critical for the take-off of the renewable energy industry and is responsible for the power purchase agreements between Eskom and IPPs, many industry players are calling for its independence from Eskom.<br/>Although there is general agreement on the need for an SBO, there are concerns and questions about its impartiality since it is established within Eskom, and that it will not favour or support smaller power projects.<br/>It is understood that there are proposals and discussions to house the SBO externally to Eskom, however no decision has been made to date, although it is understood that a draft bill has been proposed to establish an independent System Operator.
-*''Power Purchase Agreement:'' In order to provide greater certainty to developers and investors, it has been proposed by NERSA that there will be a standardised PPA. A draft PPA, based on the Medium-Term Power Purchase Programme (MTPPP), PPA was released for public comment in August 2009 and is expected to be finalised by the end of October of this year.<br/>The main concerns from developers about the PPA was the greater security and therefore limited risk it provided to Eskom, compared to that for developers.
+*'''Power Purchase Agreement:''' In order to provide greater certainty to developers and investors, it has been proposed by NERSA that there will be a standardised PPA. A draft PPA, based on the Medium-Term Power Purchase Programme (MTPPP), PPA was released for public comment in August 2009 and is expected to be finalised by the end of October of this year.<br/>The main concerns from developers about the PPA was the greater security and therefore limited risk it provided to Eskom, compared to that for developers.
 *'''Project size:''' A small number of developers have raised concerns that the SBO may only be interested in larger renewable energy projects, with a suggestion that this may only include projects above 20MW. The REFIT however focuses on all projects above 1MW.
 *'''Licensing procedures: '''It is expected that the detailed guidelines will be developed and published in the near future to assist and support project development in a clear and transparent manner. These guidelines will also need to clearly specify the detail application process, identifying the roles of particular stakeholders, and also defining the timelines for the relevant authorities to address and respond to the various issues.<br/>It is expected that these guidelines will also provide guidance on the specific obligations for the REPA, and therefore Eskom’s Single Buyer Office, to purchase power.
@@ Line 137: / Line 137: @@
 <br/>
 ==== Cost Recovery and Capacity Cap ====

@@ Line 63: / Line 63: @@
 <br/>
 === Tariffs Set for the Included Technologies<br/> ===
 The tariffs set out in the REFIT are generous when compared to international feed-in tariffs and cover the cost of generating renewable energy plus a ”reasonable profit” to encourage developers to invest. The tariffs are competitive globally and have been designed to take into account the higher risks associated with project development in a new environment, where there may be greater challenges in terms of finalising power purchase agreements and actually getting grid connection.
 The table provides the REFIT Phase 1 tariffs, which have been published and gazetted by NERSA and Phase 2 tariffs, which have recently been published.
 {| cellspacing="1" cellpadding="1" border="1" align="left" style="height: 261px; width: 859px;"
 |-
 | <br/>
-| style="width: 513px;" | Technology<br/>
+| style="width: 513px;" | Technology
-| style="width: 117px;" | tariff [Rand/kWh]<br/>
+| style="width: 117px;" | tariff [Rand/kWh]
-| style="width: 124px;" | tariff [€/kWh]<ref>The exchange rate for the 19.7.2011 (9,8321 Rand = 1€) provided by the web-page 'finanzen.net'[[http://www.finanzen.net/devisen/euro-suedafrikanischer_rand-kurs]] was used to convert the tariff in €/kWh. The conversion allows comparison to other feed-in tariffs.</ref><br/>
+| style="width: 124px;" | tariff [€/kWh]<ref>The exchange rate for the 19.7.2011 (9,8321 Rand = 1€) provided by the web-page 'finanzen.net'[[http://www.finanzen.net/devisen/euro-suedafrikanischer_rand-kurs]] was used to convert the tariff in €/kWh. The conversion allows comparison to other feed-in tariffs.</ref>
 |-
-| rowspan="4" | Phase I<br/>
+| rowspan="4" | Phase I
-| style="width: 513px;" | Landfill gas power plant<br/>
+| style="width: 513px;" | Landfill gas power plant
-| style="width: 117px;" | 0,90<br/>
+| style="width: 117px;" | 0,90
-| style="width: 124px;" | 0,09<br/>
+| style="width: 124px;" | 0,09
 |-
-| style="width: 513px;" | Small hydro power plant (less than 10MW)<br/>
+| style="width: 513px;" | Small hydro power plant (less than 10MW)
-| style="width: 117px;" | 0,94<br/>
+| style="width: 117px;" | 0,94
-| style="width: 124px;" | 0,10<br/>
+| style="width: 124px;" | 0,10
 |-
-| style="width: 513px;" | Wind power plant<br/>
+| style="width: 513px;" | Wind power plant
-| style="width: 117px;" | 1,25<br/>
+| style="width: 117px;" | 1,25
-| style="width: 124px;" | 0,13<br/>
+| style="width: 124px;" | 0,13
 |-
-| style="width: 513px;" | Concentrating solar power (CSP) with storage<br/>
+| style="width: 513px;" | Concentrating solar power (CSP) with storage
-| style="width: 117px;" | 2,10<br/>
+| style="width: 117px;" | 2,10
-| style="width: 124px;" | 0,21<br/>
+| style="width: 124px;" | 0,21
 |-
-| rowspan="5" | Phase II<br/>
+| rowspan="5" | Phase II
-| style="width: 513px;" | Concentrating solar power (CSP) without storage<br/>
+| style="width: 513px;" | Concentrating solar power (CSP) without storage
-| style="width: 117px;" | 3,14<br/>
+| style="width: 117px;" | 3,14
-| style="width: 124px;" | 0,32<br/>
+| style="width: 124px;" | 0,32
 |-
-| style="width: 513px;" | Biomass solid<br/>
+| style="width: 513px;" | Biomass solid
-| style="width: 117px;" | 1,18<br/>
+| style="width: 117px;" | 1,18
-| style="width: 124px;" | 0,12<br/>
+| style="width: 124px;" | 0,12
 |-
-| style="width: 513px;" | Biogas<br/>
+| style="width: 513px;" | Biogas
-| style="width: 117px;" | 0,96<br/>
+| style="width: 117px;" | 0,96
-| style="width: 124px;" | 0,10<br/>
+| style="width: 124px;" | 0,10
 |-
-| style="width: 513px;" | Photovoltaic systems (Large ground or roof mounted)<br/>
+| style="width: 513px;" | Photovoltaic systems (Large ground or roof mounted)
-| style="width: 117px;" | 3,94<br/>
+| style="width: 117px;" | 3,94
-| style="width: 124px;" | 0,40<br/>
+| style="width: 124px;" | 0,40
 |-
-| style="width: 513px;" | Concentrating Solar Power (CSP) Central Tower with storage capacity of 6 hours<br/>
+| style="width: 513px;" | Concentrating Solar Power (CSP) Central Tower with storage capacity of 6 hours
-| style="width: 117px;" | 2,31<br/>
+| style="width: 117px;" | 2,31
-| style="width: 124px;" | 0,23<br/>
+| style="width: 124px;" | 0,23
 |}
+<br/>
 <br/>

@@ Line 117: / Line 117: @@
 <br/>
 === Key Issues of Tariff Implementation<br/> ===
@@ Line 125: / Line 126: @@
 Although the REFIT guidelines provide a basic structure for the implementation of the programme, further clarity is still required on key issues such as the pre-qualification criteria, licensing process, and fixed timelines in South Africa. Some of these issues are presently under discussion.
-*''Pre-qualification criteria:'' This is still an issue which appears to be an ongoing debate and is of major concern to developers. In order to quantify the potential market and make sure only good quality projects are brought on line, it is understood that a pre-qualification process may be proposed as part of the REFIT application process. Although this issue has not been finalised, this could have the effect of discouraging a certain amount of investment in renewables and increasing risk to developers and investors. Experience in other countries in the establishment of FITs shows that certain parties, including utilities have also proposed combining a tender with a FIT, however this proved to be unworkable and was rejected. The integration of any tendering processes would also significantly increase the costs of project development and would also slow down the project development process. A decision on this issue is awaited.
+*'''Pre-qualification criteria:''' This is still an issue which appears to be an ongoing debate and is of major concern to developers. In order to quantify the potential market and make sure only good quality projects are brought on line, it is understood that a pre-qualification process may be proposed as part of the REFIT application process. Although this issue has not been finalised, this could have the effect of discouraging a certain amount of investment in renewables and increasing risk to developers and investors. Experience in other countries in the establishment of FITs shows that certain parties, including utilities have also proposed combining a tender with a FIT, however this proved to be unworkable and was rejected. The integration of any tendering processes would also significantly increase the costs of project development and would also slow down the project development process. A decision on this issue is awaited.
-*''Single Buyer Office: ''According to a Cabinet paper, the national electricity utility Eskom was appointed as the single buyer of electricity in the country, with both the right and obligation to buy power. The need for a single buyer is justified in this country due to the small power market in which the various players operate. At present, it is considered that the market in South Africa is not large enough or diverse enough to sustain multiple power buyers.<br/>In response to this, Eskom established the Single Buyer Office (SBO). Under the REFIT, Eskom’s SBO was appointed as the REPA.<br/>The office is instrumental in facilitating investment in renewable energy in South Africa and because the SBO is critical for the take-off of the renewable energy industry and is responsible for the power purchase agreements between Eskom and IPPs, many industry players are calling for its independence from Eskom.<br/>Although there is general agreement on the need for an SBO, there are concerns and questions about its impartiality since it is established within Eskom, and that it will not favour or support smaller power projects.<br/>It is understood that there are proposals and discussions to house the SBO externally to Eskom, however no decision has been made to date, although it is understood that a draft bill has been proposed to establish an independent System Operator.
+*'''Single Buyer Office: '''According to a Cabinet paper, the national electricity utility Eskom was appointed as the single buyer of electricity in the country, with both the right and obligation to buy power. The need for a single buyer is justified in this country due to the small power market in which the various players operate. At present, it is considered that the market in South Africa is not large enough or diverse enough to sustain multiple power buyers.<br/>In response to this, Eskom established the Single Buyer Office (SBO). Under the REFIT, Eskom’s SBO was appointed as the REPA.<br/>The office is instrumental in facilitating investment in renewable energy in South Africa and because the SBO is critical for the take-off of the renewable energy industry and is responsible for the power purchase agreements between Eskom and IPPs, many industry players are calling for its independence from Eskom.<br/>Although there is general agreement on the need for an SBO, there are concerns and questions about its impartiality since it is established within Eskom, and that it will not favour or support smaller power projects.<br/>It is understood that there are proposals and discussions to house the SBO externally to Eskom, however no decision has been made to date, although it is understood that a draft bill has been proposed to establish an independent System Operator.
 *''Power Purchase Agreement:'' In order to provide greater certainty to developers and investors, it has been proposed by NERSA that there will be a standardised PPA. A draft PPA, based on the Medium-Term Power Purchase Programme (MTPPP), PPA was released for public comment in August 2009 and is expected to be finalised by the end of October of this year.<br/>The main concerns from developers about the PPA was the greater security and therefore limited risk it provided to Eskom, compared to that for developers.
-*''Project size:'' A small number of developers have raised concerns that the SBO may only be interested in larger renewable energy projects, with a suggestion that this may only include projects above 20MW. The REFIT however focuses on all projects above 1MW.
+*'''Project size:''' A small number of developers have raised concerns that the SBO may only be interested in larger renewable energy projects, with a suggestion that this may only include projects above 20MW. The REFIT however focuses on all projects above 1MW.
-*''Licensing procedures: ''It is expected that the detailed guidelines will be developed and published in the near future to assist and support project development in a clear and transparent manner. These guidelines will also need to clearly specify the detail application process, identifying the roles of particular stakeholders, and also defining the timelines for the relevant authorities to address and respond to the various issues.<br/>It is expected that these guidelines will also provide guidance on the specific obligations for the REPA, and therefore Eskom’s Single Buyer Office, to purchase power.
+*'''Licensing procedures: '''It is expected that the detailed guidelines will be developed and published in the near future to assist and support project development in a clear and transparent manner. These guidelines will also need to clearly specify the detail application process, identifying the roles of particular stakeholders, and also defining the timelines for the relevant authorities to address and respond to the various issues.<br/>It is expected that these guidelines will also provide guidance on the specific obligations for the REPA, and therefore Eskom’s Single Buyer Office, to purchase power.
-*''Grid Connection:'' The REFIT states that the developer is responsible for the shallow grid connection and that the utility is responsible for any grid upgrades. Although this principle is agreed, the precise mechanisms have not been put in place. This is of particular concern to a number of wind developers who have some sites identified, but could be facing a four year delay, which is the present timeline for such network upgrades.
+*'''Grid Connection:''' The REFIT states that the developer is responsible for the shallow grid connection and that the utility is responsible for any grid upgrades. Although this principle is agreed, the precise mechanisms have not been put in place. This is of particular concern to a number of wind developers who have some sites identified, but could be facing a four year delay, which is the present timeline for such network upgrades.
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