On the first page of the COFIT discussion paper, it states:
“The support scheme is designed to reward on-site generation of electricity by industries that utilise their waste to produce electrical energy for their own use and/or selling to the grid.”
In Section 4.3 (pg. 14), it states that, “The COFIT is designed to reward cogeneration projects that export power to the grid.”
Which is it? For export or own use? The COFIT paper appears to be confused and divided on this issue, which also masks confusion on the meta-purpose of COFIT. Although not clear in the COFIT paper, it seems that the meta-purpose may be to encourage private generation and a liberalisation of the electricity sector.
If so, this is contrary to Earthlife Africa Jhb’s view of what COFIT should achieve. COFIT should be a measure that enforces energy conservation through the minimisation of “waste” energy. In other words, a successful COFIT should mean that industries to whom COFIT applies use less electricity from the grid than they did before COFIT. The saving to the nation and the public at large is a reduction of generation requirements on Eskom, and a subsequent reduction in environmental pollution. The point is to replace coal-fired power stations with clean co-generation.
This meta-point appears to be in contradiction with the COFIT policy as it is represented in the discussion paper. It would seem, if implemented as is, that COFIT would have the perverse outcome of not reducing grid demand but increasing overall supply at the cost of heavy energy subsidies. Furthermore, because of high tariffs in the COFIT, there would seem to be another perverse incentive; instead of companies co-generating electricity to reduce costs, companies will engage in often dirty co-generation for the purpose of sale at a profit. Basically, why use co-generated electricity internally when it can be sold externally at a tariff higher than what electricity is purchased from Eskom (or some other supplier)?
The ultimate driver for co-generation should not be a government subsidised profit, but a response to increased tariffs or, even, a condition of licence; for example, the sugar industry should be legally required to produce at least a portion of its own electricity.
In addition to this meta-objection, there are a number of specific objections, download Earthlife Africa Jhb COFIT Comments. Download NERSA discussion paper: NERSA Consultation Paper Cogeneration Regulatory Rules and Feed-In- Tariff