A Win For Independent Power Producers

Yesterday (26 March 2019), Judge P.A. Meyer handed down judgment in the High Court of South Africa (Gauteng Division, Pretoria) dismissing the application by the Coal Transporters Forum. The application was to interdict Eskom from entering into power purchase agreements with three Independent Power Producers (IPPs) in the Small Project Programme and to declare the power purchase agreements already concluded by Eskom in Bid Window 4 of the Renewable Energy Independent Power Producer Procurement Program invalid.

The judgment reflects on the development of the South African government's integrated resource plan which, although recognising South Africa's dependence on coal as its primary source of power generation, seeks ultimately to reduce carbon emissions and foster a balance of generation technologies.

In this vein, and following the publication of the final version of the integrated resource plan 2010-2030 on 6 May 2011, which provided for a 17.8 GW allocation of power generation from renewable sources, the Minister of Energy (the Minister) published a determination on 1 August 2011, pursuant to her powers in terms of section 34(1) of the Electricity Regulation Act 4 of 2006 (the ERA), in which she determined that 3725 MW of renewable energy should be procured from IPPs. On 19 December 2012, the Minister published a further determination resolving that an additional 3200 MW of renewable energy should be procured from IPPs.

The primary contention of the Coal Transporters Forum was that Eskom was not entitled to conclude power purchase agreements with the IPPs until such time as the National Energy Regulator of South Africa (NERSA) had taken certain decisions in relation to, inter alia, the prices and tariffs at which the electricity produced by an IPP should be sold and purchased and other matters which, the...