NERSA, the National Energy Regulator for South Africa, has released a proposal for the introduction of feed-in tariffs for the country.

If implemented, this would be a milestone for South Africa’s renewables sector, as the establishment of support mechanisms are critical to attracting finance into the sector.

The ongoing public consultation process ends on January 15th .

What’s really good about the REFIT (renewable energy feed-in tariff) is that it sets a target for 10,000 GWhr from renewables. This is the same target that was set out in the government’s white paper on renewable energy in 2003.

Eskom, the state utility, will be appointed as the Renewable Purchasing Agency, however, NERSA would determine conditions such as the types of energy to be given priority. Thus, an IPP would be selling their power to Eskom (by law since they are a monopoly). The interactions between Eskom and NERSA still need to be worked out.

The REFIT is anticipated to run over 15 years until 2022. This is beyond the 2013 target of 10,000 GWhr as set by the Department for Mines and Energy in the White Paper.

Now that the proposal has been submitted by NERSA for public comment, the next steps are to set out the implementation guidelines.

The tariff set would take into consideration costs of production and a measure of ‘reasonable profit’ from such production to Independent Power Producers.

It will be a while until all the bits are worked out, but South Africa is now well on its way towards the establishment of policy and regulatory frameworks required for renewable energy to flourish.