The South African government has expressed concern that its plans for the addition of new renewables capacity could be disrupted should a legal challenge launched against Eskom's recently announced grid allocation rules prevail and has also indicated that it would favour a settlement instead.

G7 Renewable Energies, together with two of its wind farm companies, has launched a two-part application to, firstly, interdict the implementation of Eskom's Interim Grid Capacity Allocation (IGCA) rules, which came into force on June 27, as well as to have the rules reviewed and set aside based on their alleged illegality under the Promotion of Administrative Justice Act.

Eskom revised its grid rules following Bid Window Six (BW6) of the public renewables programme, when none of the 23 wind projects vying for a 3 200 MW allocation were able to advance to preferred-bidder status after it emerged that budget quotes for the same grid capacity on which the projects were bid had, instead, been allocated to companies pursuing bilateral contracts with private offtakers.

The IGCA framework unveiled on June 27 replaced the previous 'first come, first served' approach with a 'first ready, first served' model, which Eskom said was necessary to ensure that only shovel-ready projects were granted grid capacity in a context of severe grid scarcity in certain regions.

The initial industry response was cool, with all the associations describing the new rules as "onerous". Nevertheless, it was indicated that engagements would continue and that further adjustments might be made in future to accommodate the concerns raised by independent power producers.

On July 17, however, G7 Renewable Energies launched an application in the Gauteng High Court to interdict the implementation of the IGCA and to have them declared illegal.

Speaking during a regular briefing to provide an update on the progress government was making to implement the Energy Action Plan, the Presidency's Rudi Dicks confirmed that government was aware of the legal challenge and stated that "if the interdict is granted, it does create a problem for us".

"So, what we need to do, of course, is try and see whether we can find a resolution outside of court," Dicks added.

He also noted that, while Eskom and government were aware that concerns had been raised about the rules, there had already been efforts taken to address these issues.

"In actual fact, on the 13th of July, we had convened a meeting with industry - with the wind and the photovoltaic associations and Business for South Africa, who are participating in National Energy Crisis Committee (NECOM) structures - to discuss the concerns."

He said that the conversations had been "fruitful and constructive" and that Eskom had indicated that it would take the issues raised into consideration so that the rules could be adapted.

Electricity Minister Dr Kgosientsho Ramokgopa said that, while he could not intervene in a court process, he was keen to ensure that there was "some degree of harmony" around the grid rules.

"I'm convinced that everyone is committed to ensuring that we're able to resolve the energy challenge in the country, and also ensuring that we're able to introduce new sources of generation, especially from renewable energy sources.

"So, of course, there's a court process and we will not interfere with that . . . but we'll do everything possible to ensure that we engage with the parties, including G7 themselves, to see how best we can find a resolution that, first, addresses the best interests of the country, but without undermining the financial interest of the players in the renewable energy space," Ramokgopa said.

Should such efforts fail, however, there is concern that BW7, which is meant to be launched in September for 5 000 MW, could be delayed.

South African Independent Power Producer Association chairperson Brian Day, who had also expressed unease with the rules when they were published, told Engineering News that the court ...