On 26 March 2009 South Africas National Energy Regulator (NERSA) approved the countrys first renewable energy feed-in tariff (REFIT) scheme. The REFIT places an obligation on Eskom (South Africas public utility) to purchase the output from qualifying renewable energy generators at pre-determined prices based on the levelised cost of electricity. Eskoms Single Buyer Office has been appointed as the Renewable Energy Purchasing Agency (REPA), and is obliged to purchase power from licensed renewable energy generators. Licensed independent renewable energy power producers can also sell power directly to buyers outside of the REFIT mechanism. The cost of the tariff will be passed through to Eskom electricity customers.
On 26 March 2009, NERSA approved REFITs Phase I which covered the following four technologies: Wind; Small hydro; Landfill Gas Methane and Concentrated Solar (CSP), Plant Parabolic trough with storage (6 hrs per day).
- For 2009 the REFIT are as follows:
- ZAR 1.25/kWh for wind;
- ZAR 0.94/kWh for small hydro (less than 10 MW);
- ZAR 0.90/kWh for landfill gas;
- ZAR 2.10/kWh for concentrating solar power (CSP).
On 2 November 2009, REFITS Phase II tariffs were approved for six new technologies:
- Concentrated Solar Power (CSP) trough without storage (ZAR 3.14/kWh),
- CSP Tower with storage of 6 hrs per day (ZAR 2.31/kWh),
- Large-scale (1MW or more) grid connected PV systems (ZAR 3.94/kWh),
- solid biomass (ZAR 1.18/kWh)
- biogas (ZAR 0.96/kWh).
Fossil fuels can be included in the CSP technologies, but are limited to 15% of total primary energy input.
The REFIT power purchase agreement will last for 20 years, and the tariff can be adjusted yearly for inflation.
For the first five years of the REFIT, a full review of the scheme will take place yearly, following which it will take place every three years. Specific license conditions for renewable energy generators include reporting, monitoring and verification requirements, and termination conditions for non-compliance with production of renewable energy.
The REFIT scheme does not include off-grid power generation.
Specific license conditions for renewable energy generators include reporting, monitoring and verification requirements, and termination conditions for non-compliance with production of renewable energy. The REFIT scheme does not include off-grid power generation.
In 2011, the South African Department of Energy revised its renewable energy strategy, switching from the REFIT remuneration system to a procurement process based on price competition. (Please read more in: "Renewable Energy Independent Power Producer Programme (REIPPP)")
Instead of enacting a downward adjustment of the 2009 tariff schemes, as scheduled for June 2011, the national energy regulator NERSA validated the change to a competitive bidding process. As of July 2011, 1, 000MW of new renewable energy generation capacity from onshore wind, solar thermal, solar photovoltaic, biomass, biogas, landfill gas, or small hydro have been issued for tender. Since the tender process will go on without predetermined reference tariff, the 2009 REFIT levels will be maintained acting as a ceiling price against which potential developers and investors could tender.