Melissa Kerim-Dikeni

ICLEI

Presentation Abstract:

Approximately 14% of South African households still lack access to the national electricity grid, while at least 40% of South Africans experience energy poverty. However, South Africa still remains one of the most energy intensive countries in the world (SEA, 2017). The potential of renewable energy to address these two challenges have been recognized by the South African Government which, among other things, adopted the Renewable Energy Independent Power Producer Procurement Programme (REIPPP) in 2010. This programme is based on a competitive auction system whereby the winning bidders are given the right to sign power purchase agreements with Eskom, the public utility and main electricity provider. The REIPPP was presented by the Department of Energy as a ground-breaking text in the field of energy and community ownership and socio-economic development (DoE, 2017). In fact, the choice of the winning bidder is based, for 30% on the bidder’s commitment to socio-economic development criteria (DoE, 2011). Moreover, a minimum of 2,5% of each project must be owned by local community(effectively an equity shareholding in each company) with a goal of 5% local ownership (DoE, 2017).Despite these commitments, academic research have underlined the flaws of this text including uneven community identification, imperfect consultation process, delays in dividend payment, sub-optimal land use, etc(Overy,2018). From these observations derives the following question: is the South African legal framework dealing with community ownership over energy projects, and especially the REIPPP provisions, the best support scheme for community power projects? More precisely, is the auction system provided by the REIPPP is the best suited to promote community power? This is not sure considering the fact that auctions generally favor established and large investors and discourage small scale projects (IRENA, 2018). The South African example confirm this assertion: during the first round of the REIPPP, the majority of the successful bidders were large scale companies (Wlokas, 2017).On the other hand, feed-in in tariffs are considered as a contributory factor to the success of community renewable energy projects (IRENA, 2018).In fact, they ensure predictability for project developers which enables long-term planning and allows community RE projects to access private finance. Originally, the REIPP was conceived as a feed-in tariff (Baker et al., 2015).However, in August 2011, the feed-in tariff model was declared illegal following an assessment carried out by a law firm, on the basis that it did not respect procurement law (Creamer 2011). Consequently the competitive bidding process was adopted. Envisaging diverse national support schemes to community power projects, this article draws upon examples implemented in Europe and other African countries to identify the strengths and weaknesses of the current South African legal framework addressing community power.

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