South Africa approves renewables incentive tariff including hydro

South Africa’s energy regulator has approved renewable energy �feed-in� tariffs intended to set guaranteed prices that national utility Eskom must pay for electricity generated by small hydro, wind, solar, and landfill gas projects.

The National Energy Regulator of South Africa (NERSA) said March 31 that the tariff sets out the price per unit of electricity to be paid for energy from renewable sources generated by private power producers. (HNN 12/19/08) The renewable energy feed-in tariff (REFIT) covers the cost of power generation and allows for a reasonable profit to induce developers to invest in renewable energy

Its definition of qualified renewable energy, �produced by means of naturally occurring non-depletable sources of energy,� includes the technologies mentioned above, plus tidal, wave, ocean current, biomass, and geothermal sources.

“The approved REFIT guidelines will create an enabling environment for achieving the government’s 10,000 GWh renewable energy target by 2013 and sustaining growth beyond the target,” Thembani Bukula, NERSA’s member for electricity regulation, said.

South Africa will pay 1.25 rand (13 US cents) for each kilowatt-hour produced from wind, 0.94 rand (9.8 US cents) for the same from hydropower, 0.90 rand (9.4 US cents) for electricity from landfill gas, and 2.10 rand (21.8 US cents) for power from concentrated solar energy.

A qualifying renewable power generator is defined as a new investment in electricity generation using hydropower of less than 10 MW, wind, landfill gas, or concentrating solar power. A qualifying plant also can include project modernization, repowering, expansion, or additional capacity at existing sites, with only the additional capacity deemed to be qualifying.

Additional capacity for a modernized subsequent hydropower plant with an installed capacity up to a maximum of 50 MW shall qualify as renewable energy if the plant is modernized subsequent to April 1, 2008, and the modernization has resulted in an increase in electrical energy of at least 15 percent.

NERSA issued a consultation paper in December, proposing tariffs ranging from 60-74 cents per kilowatt-hour, but raised the levels after criticism that the figures suggested were too low for projects to be viable and to offer reasonable returns.

NERSA said the tariff will be reviewed every year for five years and every three years after that. Tariffs will only apply to new projects, it said.

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