SA wind industry queries legality of Eskom’s force majeure

Eskom said producers will be compensated for lost revenue by having their contracts extended by the amount of time lost.
Image: Paul Harris/Getty Images

South African wind energy producers questioned the legality of a decision by the state power utility to curtail purchases of their output, amid low demand caused by a nationwide lockdown to deal with the coronavirus outbreak.

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 done 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 Wednesday in a statement.

Some experts consider reduced demand as a normal system event that 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 March 26 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.

The force majeure notices serve to alert wind producers that Eskom may curtail their supply during the lockdown, the utility said Wednesday in a statement. “Should this remote possibility happen,” the producers will be afforded one day of relief for every day, or part thereof, of lost production, it said.

South Africa has 22 operational wind farms that have a combined generation capacity of almost 2 000 megawatts, while another 12 are under construction.

© 2020 Bloomberg

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Ahh another set of rent-seekers complaining,

Pushing your gamble losses again for the tax payers account? nice

just turn them off, thank you

You do have a right to an opinion. You don’t have the right to your own set of facts though. The Eskom dinosaur is in the utility death-spiral. Their socialist shareholder destroyed their business model and now the free market green projects have to bail them out.

What does that have to do with his point that these are rent seekers trying to piggy back on Eskom to fleece the consumer? Why should Eskom buy energy when it does not need it?

Are you preferring to pay more for energy just to enrich private entities?

Audioshark, thank you for your comment. New green energy comes in at less than half of the cost of new coal and at less than 30% of the cost of Cusile and Medupi. So, in what way will the consumer enrich private entities when the private entities can produce at a much lower cost structure? Or are you willing to fund the current corrupt monopoly of government?

Plus – The Regulator and Eskom have a contractual agreement with green projects. Are you suggesting that the government goes back on its deal and break the contract? That will be plain criminality.

Eskom looking after itself. Essentially choosing to keep on their bloated and overpaid workforce over paying a premium due to the enforced BEE component of the IPP’s. But they have promised this lot a lifeline by extending their contracts, pushing payments onto future generations. Instead of just doing the right thing and right sizing.

True Paul,

It is a mess, and the cherry is here you have SA wind industry queries legality…

but perhaps the bloated Eskom has a legal footing to even cancel purchases it is a global pandemic no?

In place is Europe the grid is legally obliged to purchase green energy anyway, and a few times with big storms pushed electricity price to NEGATIVE!

Eskom’s Alimony – and the games they play.
‘’Alimony is the screwing you get for the screwing you got’’
Anonymous.

So why should Eskom be FORCED to take energy from these private entities when not required, and pass that cost on to the consumer? Bunch of scammers trying to fleece the public some more with their windmills and forced takeoff clauses.

Welcome to the real world, scam artists…

They signed contracts. In the first world that means something.

When this is all over and the first factory switches on they will be begging for power.

force majeure?

End of comments.

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