Agreements for the rollout of three of the 11 successful bids for SA’s emergency power procurement programme, which was launched in 2020 to supplement the country’s immediate energy shortfall with about 2,000MW of power supply to help alleviate load-shedding, were signed on Thursday by Eskom, the government and the bidding company.
The three projects, all from the same bidder, will add 150MW of dispatchable (baseload) solar energy to the Eskom grid when it comes online within the next 14 to 20 months.
The bid winners in the government’s emergency power plan, called the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) were announced in early 2021, but implementation of the programme has been delayed due to a court case lodged by a losing bidder that has prevented projects from achieving financial close, and due to delays by Eskom in the signing of power purchase deals with the winning bidders.
One of the most controversial of the winning bids, the one awarded to Karpowership SA to provide the largest share of the RMIPPPP at 1,220MW from floating gas-fired power plants, is still facing legal challenges opposing the National Energy Regulator of SA’s (Nersa’s) decision to grant it electricity licences.
It has “been a long journey” since the release of the request for proposals for the RMIPPPP went out in August 2020, said Bernard Magoro, head of IPP Office, at the signing of power purchase agreements for the three projects in Pretoria.
Magoro hinted that, given the government’s urgency to get new energy generation capacity online, time might be running out for the remaining projects to conclude negotiations that would enable them to reach financial close.
“We are engaging with all the bidders; they all have different challenges. At some point we will have to decide if we will continue this engagement, or the bidders will have to decide if they want to continue.”
“We want to [reach financial close] on all the projects that we procured but we have to make a call at some point [about whether to continue with the projects], but I don’t know exactly when that will be,” he said.
Mineral resources & energy minister Gwede Mantashe said the IPP Office had to pursue the other RMIPPPP projects. “We need that energy on the grid, and this includes resolving the problems with Karpowership SA,” he said.
The three 50MW solar-power projects, valued at R16bn, that were signed off on Thursday are from Scatec, a Norwegian-headquartered renewable energy solutions provider.
The installations will be based in Kenhardt in the Northern Cape.
Scatec CEO Terje Pilskog said the project will be the first of its kind in Africa and will provide 150MW of dispatchable renewable energy for 16.5 hours of the day based on a hybrid installation of 540MW of solar PV capacity and 1.1GWh of battery storage.
According to the agreements signed, financial close is to be achieved within 60 days from the signature date and after that Scatec will have to complete construction and bring the installation online within 18 months. Once financial close has been reached, Scatec will start construction of the projects immediately, Pilskog said.
Eskom group CEO André de Ruyter said that the power utility was “delighted to have reached this milestone in adding much- needed capacity to the grid”.
The purchase agreement between Eskom and Scatec includes an anti-bribery and corruption clause which was “very important given the recent history of capture and corruption” at Eskom, De Ruyter said.
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