Wind energy operators in South Africa are seeking legal advice after Eskom issued them with force majeure notices.
Utility Eskom says that lower electricity demand in the wake of the Covid-19 pandemic has forced it to issue curtailment notices to wind farms to help it manage the system during the country’s lockdown.
According to the South African Wind Energy Association (SAWEA), 22 operable wind farms with a combined installed capacity of 1980 MW have received notices.
SAWEA said that the notices had come as a surprise as Eskom had not alerted the wind farm owners of its plans, and sent out a letter to all independent power producers (IPPs) at the end of March confirming that power facilities were classed as an essential service.
“It is concerning that wind energy power producers have not been given an opportunity to engage on this matter with Eskom, despite both Eskom and government confirming that operational IPPs are in fact an essential service,” said Ntombifuthi Ntuli, CEO of SAWEA. “The industry will be approaching Eskom with a view to finding a constructive resolution that does not prejudice the country nor the power producers.”
SAWEA said in a statement that it was seeking legal advice on whether reduced electricity demand as a result of Covid-19 could be classed as force majeure, as declared by Eskom, or whether it should be deemed a normal system event.
“Eskom has indicated in their letter to IPPs that they will make provision for the extension of the Power Purchase Agreement period to make up for the curtailment period, however, we are concerned about the immediate impact this will have on shareholders, particularly, BBBEE partners and community trusts, who have loans to repay,” added Ntuli.
According to law firm Pinsent Masons, Eskom’s move “is likely to have a revenue impact on the affected projects and cause real consternation among investors, project sponsors and lenders”. The power purchase agreements (PPAs) signed by Eskom and the IPPS includes a definitive list of force majeure events.
Neither reduced electricity demand nor virus pandemics are included in this list, Pinsent Masons notes.
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