SAPVIA meeting with Treasury (29th March 2011)

SAPVIA and SAWEA representatives met with Karen Breytenbach from Treasury on Tuesday, the 29th of March, 2011 to discuss the NERSA consultation paper and the effects it would have on the industry. The outcomes of the meeting were:

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Present: Karen Breytenbach, Mark Tanton, Johan van der Berg, Davin Chown, Thibaud Vibert, Ryan Hammond, Chris Haw

• The release of NERSA’s consultation paper came as a surprise to Treasury and DoE.
• Delays expected from Treasury in the release of the RFP documents should the NERSA consultation be applied to this year was in the order of 3-6 months.
• COP17 deadline for having kicked-off projects is not compatible with NERSA new consultation. It can lead to start quickly the competitive price bidding process.
• Treasury and some people at DoE are in favour of a competitive price bidding process but Karen Breytenbach conceded that a signal based on a fixed tariff had been sent to the market and had set expectations.
• SAPVIA/SAWEA pointed out some possible negative impacts of competitive pure price bidding process: local economic development, community social development, short term vision…
• If instructed to by DoE they would procure using a fixed tariff, however there was concern that Treasury were required by law to procure in a competitive manner.
• SAPVIA and SAWEA requested treasury to support the use of the 2009 tariffs for the first procurement round and to continue with the process as it was before.
• SAPVIA/SAWEA stressed the importance of keeping consistency in the process to ensure investor confidence and pointed out the poor track record of a bid process in other countries.
• Treasury would prefer to have the revised tariffs apply to REFIT procurement beyond the committed build of 1025 MW, because of changes on RFP documents required by new REFIT and consecutive delays.
• We understand that a small amount of the 1025MW has been budgeted for PV, current estimations that this is 50MW.
• Treasury said they were expecting variant bids (i.e. lower FiT price) to be submitted through the RFP process, but did not comment on how bids with lower prices would be scored – (currently there is no criteria for price in the REFIT procurement guidelines).
• It was resolved that SAPVIA and SAWEA would approach NERSA to request that the consultation and revised tariffs be applied from 2014 onwards to allow the previously imminent procurement process to continue as planned.

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