Minerals & energy minister Gwede Mantashe has announced the opening of bid window 6 of the government’s renewable energy programme, which will procure 2,600MW from independent power producers (IPPs).
This will be more than enough energy for power utility Eskom to avoid stage 2 rolling power cuts when the projects are up and running. About 1,600MW will be from wind and the balance from solar.
The latest bid window brings SA’s procurement via the Renewable Energy IPP Procurement Programme (REI4P) to about 7,800MW, Mantashe said at the Platinum Group Metals Industry Day in Johannesburg on Wednesday.
His comments come days after a landmark climate change mitigation report by the Intergovernmental Panel on Climate Change called for a rapid phasing out of fossil fuels.
According to the report, the world will have to cut global emissions by 45% before the end of this decade to keep global warming within the “manageable” range.
The REI4P aims to supplement the national grid through private sector investment in renewables, including wind, biomass and small hydro plants.
The procurement process, which stretches over multiple bidding windows, allows independent producers to submit bids to design, develop and operate renewable energy plants across SA.
Bid window 5 is expected to reach financial closure by the end of April, and the closing date for submissions for bid window 6 is August 11.
The latest round comes just a week after the department confirmed the postponement of the signing of power purchase agreements for the Risk Mitigation IPP Procurement Programme, which is now scheduled for the end of April and is meant to alleviate Eskom’s power constraints.
The department said in a statement that given the energy challenges the country was facing, the qualification criteria for bidders have been developed to promote the participation of projects that are fully developed and will be able to be constructed and connected to the national grid as soon as possible, but not later than 24 months after commercial close.
In addition to the provision of energy output, this renewable energy programme covers the provision of and payment for ancillary services, which support the reliable and secure operation of the transmission system by the buyer, acting through its system operator.
A bidders conference is scheduled to be hosted by the department in May or June, to provide more information on the qualifying criteria and bid submission expectations.
As in the previous round, prospective bidders are required to pay a non-refundable fee of R25,000 per bid.
If bidders intended to submit more than one project, they need to make an additional payment of R25,000.
Energy security
The SA Wind Energy Association welcomed the news and said it represents another step towards tackling energy security in SA.
“The announcement to open bid window 6 ... adds vitally needed power capacity to the country, which continues to struggle with strangled supply that is preventing the economic recovery that SA so badly needs,” said CEO Niveshen Govender.
“This also adds impetus to the sector’s push for industrialisation, which relies on rolling procurement in order for the industry to attract the necessary market investment and reduce risk,” Govender said.
Bid window 5 attracted a total of 102 responses with an oversubscribed total capacity of 9,644MW. According to the department, 2,583MW capacity was awarded to 25 bidders for 1,608MW from onshore wind generation and 975MW from solar installations.
The 25 projects are set to create 13,900 jobs, of which 7,740 will be created during the construction period and a further 6,160 jobs during the operations period.
Capacity
Under the Integrated Resources Plan of 2019, SA is to target adding new generation capacity of 31,500MW by 2030.
Most of the new capacity will come from wind and solar energy, which is set to add about 20,400MW to the grid between 2022 and 2030.
This will increase the share of renewables in the energy mix to 40% of generation capacity.
Update: April 6 2022
This article has been updated with additional information.
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