Legal challenge delays signing of US$4.7 billion renewable projects in South Africa

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The government of South Africa has delayed the much-anticipated signing of 27 PPA contracts under the country's renewable independent power producer procurement programme (REIPPPP) following a legal objection issued by the National Union of Metalworkers of South Africa (Numsa) and Transform RSA.

While Numsa and Transform SA said the signing had been interdicted, Energy Minister Jeff Radebe has insisted that government decided voluntarily to delay the signing ceremony until the matter was discussed fully in court on 27 March. Signing will apparently proceed on a date to be announced immediately after March 27.

The 27 stalled projects will add 2,305 MW to the grid and are expected to create 61,000 jobs, mostly during the construction phase. They have a combined investment value of ZAR56 billion (US$4.7 billion). They were initially bid for in 2014 and selected as preferred projects in 2015. They are supposed to begin operating from 2020.

In addition, all of the projects have been fully authorised, including the necessary endorsement of the National Energy Regulator of South Africa.

The 20-year PPAs for the wind projects would have associated tariffs ranging from 56c/kWh to 76c/kWh, while the solar photovoltaic tariffs range from 77c/kWh to 87c/kWh. The tariff for the concentrated solar power project selected during Bid Window 3.5 has not been disclosed.

Numsa are contending that signing of the PPAs will be detrimental to the South African working class, as it will lead to the closure of coal-fired power plants, potentially bring job losses to over 30,000 working class families.

However the union claims that it is not averse to renewable energy in general, and that it supports a just transition from fossil fuel power in which jobs are protected.

Proponents of renewable energy have expressed frustration and disappointment at the delay. Authorites have stressed that it does not represent the "end of the road" for the projects, citing the strong support for the programme from the Energy Minister and President Cyril Ramaphosa, who reportedly referenced the REIPPPP several times during the 2018 World Economic Forum in Davos, Switzerland.

However, it seems that the government support is not enough to progress the development of these projects, with lobbyists successful bringing the country's renewable energy sector once again to a standstill.