South Africa - Delay in wind energy development delayed due to uncertainty over the standard power purchase agreement

The standard power purchase agreement being developed by the National Energy Regulator of South Africa could delay the process.

Development at a major South African wind farm is being delayed by uncertainty over the standard power purchase agreement that will guide the sale of private power in South Africa, the affected company said on Wednesday.

Davin Chown, director of Mainstream Renewable Energy South Africa, said the company's 2,3 billion rand (315 million U.S dollar) 125 megawatt (MW) wind farm near Jeffrey's Bay in South Africa's Eastern Cape province is being held up.

Business Day newspaper in Johannesburg said on Thursday that the Jeffrey's Bay wind farm and other wind energy initiatives are important for the security of electricity supply and the reduction of South Africa's carbon footprint. Once it is connected to South Africa's electricity grid, the wind turbines project will be able to power about 200,000 homes, said Chown.

The company is a joint venture between Irish company Mainstream Renewable Power and South African-based Genesis Eco- Energy.

Speaking in Johannesburg, Chown said the wind farm, with 40 to 50 wind turbines, could be built in two years. However, the standard power purchase agreement being developed by the National Energy Regulator of South Africa could delay the process.

Chown said independent electricity producers needed "bankable" power purchase agreements. This would mean financial institutions must find the agreements attractive enough to finance.

Business Day explained that a power purchase agreement is a contract between the producer and buyer of electricity. Without it, independent producers are unlikely to raise the finance for their projects.

Chown said other areas of concern included uncertainty over connection to South Africa's national grid. "This must be sorted out because time is running out," he said.

Mainstream Renewable Power chief executive Eddie O'Connor defended the costs of wind energy. He said that it costs the same amount to generate a megawatt from wind and coal.

"The difference is the operation costs. Wind is free," he said.

He also supported the South African wind industry's suggestion that 25 percent of South Africa's power must come from renewable energy sources by 2025.

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