Mineral resources & energy minister Gwede Mantashe has reiterated that the government will not be rushed into opening a new bid window for renewable energy, notwithstanding the undertaking made by President Cyril Ramaphosa in his state of the nation speech on Thursday.
In an interview immediately after the speech, Mantashe said he would in the next few weeks make a ministerial determination under section 34 of the Electricity Regulation Act to procure energy from all generation technologies. While Ramaphosa said specifically that the government would open bid window 5 of the Renewable Energy Power Producer Programme, Mantashe said he could not commit to a time frame and was not a "fundamentalist" about bid window 5.
The bid windows refer to the bidding process by independent power producers, which compete to offer a price for renewable energy to the government.
It is not about bid window 5. It is about a comprehensive programme to ensure there is energy security in the country. So I’m not a fundamentalist about bid window 5.
— Gwede Mantashe
Round-4 projects, which were stalled for several years due to political opposition to independent power producers, are under construction.
Ramaphosa said the government would also work with producers to accelerate these projects.
"It is not about bid window 5. It is about a comprehensive programme to ensure there is energy security in the country. So I’m not a fundamentalist about bid window 5. We will implement it; we always said so, but what we are not going to do is to be pushed to stumble into it. We must be systematic and ensure it is sustainable," Mantashe said.
The minister published the long-awaited Integrated Resource Plan (IRP), SA’s long-term energy planning tool, in October after a policy impasse in government for several years.
He would now proceed with implementing by making a ministerial determination. The IRP provides a guide of how much of each energy source must be procured annually.
"We are busy with section 34 determination. Then we open bid window 5. The IRP gives renewables an allocation per annum that is an obligation on us," he said.
Business has urged the government for the past 12 months to undertake a fresh round of renewable energy bids from private producers to help alleviate the energy gap. The government estimates an energy capacity shortfall of between 2,000MW and 3,000MW until 2022.
Enabling entities such as mines, farms and businesses to generate their own energy is regarded as the quickest way to add capacity as several applications to do so are already in the pipeline. A point of contention between business and the government has been whether small projects of 10MW or below should require a licence from the National Energy Regulator of SA (Nersa), which is a time-consuming process.
Ramaphosa said in his address that the licensing requirement would remain and there would be no restriction on the size of self-generation or distributed generation projects.
Applications would be dealt with within the prescribed 120 days, he said.
Mantashe said all entities would need to first apply to the energy department, which would "take them through the Nersa process". They would need to pay for this as well as for the use of the government transmission network and even more so if they intended to sell electricity to others, he said.
Wits University economist Kenneth Creamer said Ramaphosa had sent a clear signal that he understood what needed to be done to overcome SA’s crippling electricity crisis.
"He instructed the minister of mineral resources & energy to issue a Section 34 ministerial determination in order to accelerate the implementation of the IRP, which will see the rolling out of additional solar, wind, gas and other sources of electricity generation capacity," he said.
Creamer said it was significant that Ramaphosa used the address "to announce that bid window 5 of the renewable energy programme will be opened without delay".
He said the renewable energy programme has the potential to help expand lower-cost electricity production in a relatively short time.
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