SAPVIA Reacts to Minister Pravin Gordhan on Government Decision to “RENEGOTIATE” Old IPP Contracts

The South African Photovoltaic Industry Association (SAPVIA) is a not-for-profit body which consists of active players in South Africa’s photovoltaic market who have a genuine, invested presence in the country. The association is devoted to promoting the growth of the country’s solar photovoltaic (PV) electricity market, and aims to contribute to the country’s renewable energy roll-out.

SAPVIA Chairman Mr Davin Chown, has reacted to Minister Pravin on Government Decision to “RENEGOTIATE” old IPP Contracts:

‘To stimulate and grow the SA economy, these five elements are critical: predictability, consistency, lower risk and policy certainty. A simple and blanket tariff renegotiation alone does not achieve this. A one-dimensional renegotiation does not afford the opportunity to create value for South Africa.

The renewable energy power projects have proven that they provide substantive economic value for our struggling economy – they attract much needed investment,  drive down costs with their continually decreasing tariffs, create new jobs, mitigate climate change impacts and add significant economic value to local economies and communities that are struggling for survival.

Extending PPAs by 10 years, to 30 years, affords South Africa and investors better long term value alongside lower tariffs. Simply renegotiating tariffs, without a comprehensive solution, may have limited short-term gain but and could dent investor confidence and potentially increase the cost of capital as financial institutions and investors price in the risk of an uncertain policy environment.  Ultimately this defeats the perceived short-term benefits of renegotiating tariffs. SA needs less risk, not more.

The only way to sustainably lower power prices for South Africa is to consistently procure low cost solar and wind power through a consistent, well managed programme over an extended period.’

Author: GBA News Desk

Source: SAPVIA Communications


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