South Africa’s wind energy producers are questioning the legality of a decision by the state-owned power utility to curtail purchases of their output due to low demand stemming from a national lockdown.
The South African Wind Energy Association said Eskom’s decision to invoke force majeure in its contracts with the independent power producers caught them by surprise and was invoked without consultation. Eskom has said the producers will be compensated for lost revenue by having their contracts extended by the amount of time lost.
“The industry is seeking legal counsel on whether the reduced electricity demand as a result of Covid-19 does in fact constitute force majeure, as declared by Eskom,” Sawea said on Wednesday in a statement. Some experts consider reduced demand as a normal system event and don’t give the utility the right to renege on its obligations, the association said.
South Africa has called for renewable energy producers and coal miners to lower their prices in order to help Eskom, which is struggling financially and was implementing intermittent power cuts before the lockdown began because it couldn’t meet demand. The three-week lockdown was instituted from midnight on 23 March to curb the spread of the coronavirus.
The industry will approach Eskom and attempt to resolve the issue amicably, according to Sawea CEO Ntombifuthi Ntuli. “According to the agreements in place, energy producers must be paid a deemed energy fee in line with the philosophy that all power that would have been generated is paid for,” he said.
South Africa has 22 operational wind farms that have a combined generation capacity of almost 2GW, while another 12 are under construction. — Reported by Paul Burkhardt, (c) 2020 Bloomberg LP
