RENEWABLE ENERGY FEED – IN TARIFF REGULATORY
GUIDELINES
Waste-to-Energy Seminar 17 July 2009 Cape Town
By Bianka Belinska
PRESENTATION OUTLINE
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NERSA Mandate
Renewable Energy Policy
REFIT Phase 1 Regulatory Guidelines
REFIT Phase 1 Tariffs
REFIT Phase 2
Biomass/Biogas power generation
REFIT Phase 2: NERSA public consultation process
NERSA MANDATE
NERSA mandate is derived from the objectives of the Electricity Regulation
Act, 2006 as follows:
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Achieve the efficient, effective, sustainable and orderly development and
operation of electricity supply infrastructure in South Africa
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Promote the use of diverse energy sources and energy efficiency
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Promote competitiveness and customer and end user choice; and
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Facilitate a fair balance between the interests of customers and end users,
licensees, investors in the electricity supply industry and the public
In terms of tariff principle the ERA prescribes that the Setting or approval of
tariffs must enable efficient licensee to recover the full cost of its licensed
activities, including reasonable margin of return
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RENEWABLE ENERGY POLICY
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Renewable Energy is a major contributor in protecting our climate,
nature and the environment as well as providing a wide range of
environmental, economic and social benefits that will contribute
towards long term global sustainability.
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The NERSA initiated a development of the REFIT regulatory framework to
promote renewable energy in South Africa and to meet the Government target
of 10 000GWh by 2013.
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The initially selected technologies in REFIT Phase 1 are:
− Concentrated Solar Power with storage
− Landfill Gas
− Small Hydro
− Wind
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REFIT PHASE 1 REGULATORY GUIDELINE - 26 MAR 2009
The main principles of the Regulatory Guidelines include:
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The REFIT Qualifying Principles/technologies
REFIT applies for new grid connected projects with capacity >= 1 MW
Renewable Energy Feed – in Tariffs
Renewable Energy Purchasing Agency (REPA)
Term of REFIT PPA 20 years
Annual review of the REFIT every year for the first 5-year period and every 3year thereafter
The MTPPP PPA be used as a basis for the REFIT PPA
Tariffs based on the life cycle cost of electricity produced by RE facilities
based on the adopted financial assumptions
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REFIT PHASE 1 REGULATORY GUIDELINE - 26 MAR 2009 (2)
The term of the Power Purchase Agreement is twenty (20) years:
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This is in line with international best practices and ensures bankability of the
renewable energy projects.
Clean Development Mechanism (CDM) was not included:
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In the context of the number of uncertainties post 2012 the NERSA REFIT act as
a “stand alone” financial instrument and is separated from third party market
volatility
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IPPs to apply for CDM revenue separately, this will improve the attractiveness of
the FITs.
REPA (Eskom) is the Single Buyer of electricity from REFIT IPPs
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This is in line with the Cabinet Meeting statement of 5 September 2007
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REFIT PHASE 1 TARIFFS - 26 MAR 2009
Technology
Unit
REFIT
Wind
R/kWh
1.25
Small hydro
R/kWh
0.94
Landfill gas
R/kWh
0.9
Concentrated solar
power with storage
R/kWh
2.1
The above tariffs are in constant Rand 2009
Licensees awarded these tariffs will have them adjusted for inflation using CPI
once per annum
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THE REFIT PHASE 2 – END OF SEP 2009
The second phase of the REFIT includes:
a)
Development of generic Power Purchase Agreement (PPA) for renewable
energy projects on the basis of the Medium Term Power Purchase Program
(MTPPP) PPA
b)
Development of qualifying principles for additional commercially available RE
technologies such as: biogas, biomass, photovoltaic, concentrated solar
without storage and concentrating PV
c)
Development of the tariffs for the newly included technologies as per b) above
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THE REFIT PHASE 2 – END OF SEP 2009
(2)
Qualifying technologies under Phase 2 are:
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Concentrated solar power plant without storage
Biomass solid
Biogas
Photovoltaic (PV) systems (large ground- or roof-based > 1 MW)
Concentrating PV
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BIOMASS & BIOGAS POWER GENERATION
WASTE TO ENERGY CONVERSION UNDER CONSIDERATION FOR
BIOMASS RENEWABLE ENERGY
Grouped into two categories:
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Biomass (Solid) – plants residue, tree residue, forest wood waste, agricultural
waste, and
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Biogas (non-wood organic waste, water waste, manure, municipal waste)
Biogas power generation based on fuels derived from biological treatment of
waste
Phase 2 focus more specifically on biogas derived from anaerobic digestion
Phase 1 of REFIT already provided tariff for Landfill Gas (LFG)
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BIOMASS & BIOGAS POWER GENERATION (2)
Biogas REFIT will cover plants fueled by biogas produced in dedicated
anaerobic digester system facilities
The biogas is produced from water waste, animal waste or agricultural manure
Assumed that the generation plant is in close proximity to waste treatment
facilities
Estimated biomass/biogas tariffs range from R 0.9 to 1.2 /kWh at load factor of
80%
Biogas facility and power plant should be ring fenced from the other waste
management systems
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BIOMASS & BIOGAS POWER GENERATION (3)
Financial assumptions and methodology identical to REFIT Phase 1
Tariffs based on life cycle cost of the power plant
PPA term 20 years
Applicability – new facility with capacity >1 MW
Grid-connected facilities
Power plant location in close proximity to biogas/biomass production facility
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REFIT PHASE 2: NERSA PUBLIC CONSULTATION PROCESS
Publication of consultation paper
(Qualifying principles, tariffs & PPA)
20 Jul 2009
Public comments submission on REFIT Phase 2 by
20 Aug 2009
Public Hearing on qualifying technologies, tariffs & PPA
03 Sep 2009
NERSA approval of technologies and tariffs
23 Sep 2009
(29 Oct 2009)
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THANK YOU!