Green Economy Journal Issue 60

PUBLISHER’S NOTE
Dear Reader,
Despite taking up their commitment to help customers, the banks are actually
making financing solar PV installations more difficult for customers and EPCs.
How so?
1. Miss-matching payment terms
EPCs on commercial and industrial projects are fortunate to earn a 15% margin,
and the bulk of their costs are capital in nature. As such, typical industry payment
terms are 50% deposit, 30% on delivery of equipment to site, 15% on completion
and 5% on handover. Some banks want to pay 40% deposit, 40% once under
construction (whatever that means) and 20% final payment. Under these terms,
EPCs will have to co-fund the project.
2. Linking final tranche payments to Eskom “approval” on SSEG “applications”
But that’s reasonable, right? Wrong!
Eskom can take years to approve SSEG applications, and the amount withheld
of 20% to the contractor typically exceeds their margin in the project. The
practice in the industry is to file the SSEG and then switch it on with no export of
power to the grid. This is the customer’s decision and should not affect payment
to the EPC. By getting involved and being pedantic about such matters the
banks are being obstructive, not constructive.
But are these systems illegal and therefore uninsurable?
Not in my opinion. But this should be clarified and is something the industry
and the banks should get to the bottom of. The law, as I understand it, is that
it is a requirement that Eskom and the municipalities “register” SSEGs, but in
typical fashion this registration process has been turned into an “application
for approval” process. This is an administrative over-reach in my view and
the industry should challenge it in the courts.
The fact remains, despite all the verbiage, that implementing for-own-use
energy projects in South Africa is like boxing Mike Tyson with one hand tied
behind your back.
Complaint ends here. For now.
Regards,
G R E E N
Economy
journal
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REG NUMBER: 2005/003854/07
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PUBLICATION DATE: October 2023
Publisher
EDITOR’S NOTE
The South African wind sector is following a natural evolution, indicating the
same trajectory as its global market counterparts, with a shift from resourcerich
areas to regions attractive for their ideal transmission connections. This
is further underpinned by a downward pricing curve for the cost of energy,
more powerful and bigger turbine generators as well as increased market
competitiveness. Don’t miss our interview with SAWEA CEO on page 6.
In the US, the rise of the tractor between 1910 and 1960 replaced an
estimated 24-million draught animals. Now, more than a century after the
tractor first gained traction, automation and digitisation threaten to put
many agricultural workers out to pasture. Commercial agriculture in SA
remains labour-intensive and would employ more people were it not for the
technological trends already in play, but these have boosted production,
profits and food security (page 14).
Professor Fabio Fava says that more than half of all oxygen is produced by
the hydrosphere (oceans, seas and inland waters). We obtain much of what
we need for our sustenance from the hydrosphere, starting with food.
Therefore, an overall vision of taking care of the land must also include the
blue economy (page 18).
The power sector is on the verge of an existential transformation as it works
to achieve an inclusive energy transition. However, it must do so while
resuscitating ageing infrastructure, battling more frequent weather events
and defending against security threats (both cyber and physical). Externally,
critical materials and skilled workers are in short supply, and their costs are
rising. Internally, utilities’ traditionally rigid processes run counter to the
agility they will need to build a resilient and reliable grid while being nimble
enough to withstand supply chain shocks cost-effectively (page 22).
There is a long road ahead, but the winds of change are blowing!
Enjoy!
Alexis Knipe
Editor
2
www.greeneconomy.media
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