Nersa decision weighs in favour of halting Kusile
Nersa approved an increased tariff of 24,8% as from 1 April, and subsequent increases of 25,8% and 25,9% for the following two years respectively. This is less than the 35% increase requested by power utility Eskom and substantially less than the 45% increase that the utility originally said it required to fund operational and capital costs.
The announced increase is unlikely to provide Eskom with sufficient capital to finance Kusile. This means that capital would need to be raised through alternate means, such as additional loans, asset sales, or private sector funding.
“Private finance would be better directed to developing local industries in renewable energy technologies. With timely finalisation of provisions for implementing the renewable energy feed-in tariffs, solar and wind could provide the same generation as Kusile, with far greater social benefits,” says WWF Living Planet Unit Head Saliem Fakir.
WWF believes that before proceeding with any more coal projects, beyond Medupi, South Africa requires a proper Integrated Energy Planning process that incorporates a mix of different energy solutions in line with a low-carbon development pathway. There is also concern that stakeholders have yet to be informed of the process for consultation during the development of a second Integrated Resource Plan (IRP2) promised by Minister Peters in the IRP1 issued in January.
WWF is concerned that the issues raised at the Nersa hearings have not been resolved.
“The funding model for new electricity supply, which was raised at the hearings, needs to be interrogated. A mixed portfolio model in which renewable energy plays a part would lead to a more affordable scenario for power generation costs in the future,” says Fakir.
WWF has recently joined forces with other NGOs to question the World Bank’s Funding of fossil fuel projects such as Medupi.
“The World Bank is sending out the wrong message. If it intends to promote cleaner energy solutions, it should re-examine its support for the coal-fired power station,” comments Fakir.
WWF does welcome the provisions for “inclining block rate tariffs concurrently with this price increase” that minimize impacts of tariff increases on low income domestic consumers and provide an incentive for efficient electricity use.