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Renewable energy feed-in tariff to be approved in March

The National Energy Regulator of South Africa (Nersa) hopes to finally approve the long-awaited renewable energy feed-in tariff (Refit), aimed at stimulating investment in the sector, on March 9.
Nersa has requested comments on the Refit consultation paper, which it released in December, to be submitted by January 15.

The agency would hold public hearings on February 5 at the Nersa auditorium in Pretoria.

Nersa regulator member for electricity Thembani Bukula previously stated that the agency would announce the final Refit in February 2009, after it was initially expected in September 2008.

Owing to the more expensive cost of generating electricity from renewable energy sources such as wind, sun and natural gas, feed-in tariffs were seen as a structure to stimulate large-scale investment in the renewable energy sector.

The Refit would not lower the cost of electricity for the customer, but would subsidise renewable energy generators. The tariff was expected to cover the cost of generation, plus a fair return for investors.

“The model calculates the subsidy amount as the difference between the feed-in tariff provided, and the avoided cost of power generation. This gives an indication of the additional costs to the consumer of the tariff programme,” indicated Nersa.

The model also allowed for the inclusion of carbon revenue through the Clean Development Mechanism.

The tariff schedule for 2008 to 2013 as setout in the consultation paper would be as follows: wind power 65,48c/kWh in 2008, steadily decreasing by 2,45% a year to 57,84c/kWh in 2013; hydro-power 73,76c/kWh in 2008, decreasing 0,57% a year to 71,69c/kWh in 2013; landfill gas, 43,21c/kWh in 2008, decreasing 1,16% a year to 40,75c/kWh in 2013; concentrating solar, 60,64c/kWh in 2008, lowered by 1% a year to 57,67c/kWh in 2013.

Eskom Distribution would be appointed the renewable energy purchasing agency, with the responsibility of the regulator limited to overall monitoring and review.

However, some stakeholders felt that the Nersa Refit, as put forward in the consultation paper, was not likely to attract much serious foreign direct investment, despite South Africa’s abundance of natural resources for renewable energy generation.

Additional information:
News date: 05/01/2009

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