S.Africa sets tariffs to boost renewables investment

JOHANNESBURG (Reuters) - South Africa's regulator (NERSA) has approved renewable energy tariffs to boost investment in the sector that would help meet the country's target on alternative energy, it said on Tuesday.

The tariff sets out the price per unit of electricity to be paid for energy from renewable sources generated by private power producers.

"The approved REFIT guidelines will create an enabling environment for achieving the government's 10,000 GWh renewable energy target by 2013 and sustaining growth beyond the target," Thembani Bukula, regulator member for electricity regulation, said in a statement.

The renewable energy feed-in tariff (REFIT) covers the cost of power generation and allows for a reasonable profit to induce developers to invest in renewable energy

South Africa will pay 1.25 rand for each killowatt hour produced from wind, 0.94 rand for the same from hydro, 0.90 rand for electricity from landfill gas and 2.10 rand for power from concentrated solar.

In its December consultation paper, NERSA had proposed tariffs ranging from 60-74 cents per killowatt hour, but raised the levels after criticism that the figures suggested were too low for projects to be viable and to offer reasonable returns.

NERSA said the tariff will be reviewed every year for five years and every three years after that. Tariffs will only apply to new projects, it said.

South Africa, the largest emitter on the continent, depends on coal for 90 percent of its electricity needs. Moves to diversify to other energy sources have so far stalled due to a lack of policy framework and incentives for investors.

The feed-in-tariff has long been anticipated to stimulate large-scale investments, with other incentives mulled by the government for the future.

South Africa's minerals and energy department is developing an energy and climate change strategy, due by the end of September, which will define the government's response to climate change while taking into account power shortage woes.

The country already set a target to cap emissions by 2020-25, and to reduce them by mid-century.