South Africa delays renewable projects pending court hearing

South Africa delayed signing agreements for renewable-energy projects worth 56 billion rand ($4.7 billion), after a court postponed a ruling on a labor union application to block the deals. The National Union of Metalworkers of South Africa and Transform RSA applied for an interdict on Monday evening to prevent state-owned utility Eskom Holdings SOC Ltd. from signing 27 power purchase agreements that have been held up since 2016. While the union says the projects threaten jobs and coal-fired plants, the government argues that renewable energy will stimulate economic growth and diversify South Africa’s power mix.

The High Court will hold a hearing on March 27, after both sides have submitted further arguments. Energy Minister Jeff Radebe was originally due to sign the contracts with independent power producers on Tuesday.
“Numsa believes that the signing of these contracts would be detrimental for the working class of Mpumalanga and the country as a whole,” the union said in an emailed statement, referring to a coal-rich province that has many power plants. Eskom uses coal for about 90 percent of its generation.

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Eskom previously refused to sign the agreements with energy developers including Denham Capital-backed BioTherm Energy and ACWA Power International, saying they were expensive and that power from the projects wouldn’t always be available. The utility’s management and board has since been overhauled and the government under new president, Cyril Ramaphosa, is prioritizing partnerships with the private sector.

“The delayed investment of over 59 billion rand, the creation of over 13,000 construction jobs and a further 2,000 operations jobs was meant to be unlocked today,” Brenda Martin, chief executive officer of the South African Wind Energy Association, said in a statement. Numsa, which filed its application with civil society group, Transform RSA, estimates the closure of coal-fired power stations as a result of the renewable projects would affect at least 30,000 families.


Sources and photo-credits: Bloomberg