After a six-month delay in launching bidding round 7 in the government-backed energy procurement programme, the energy department now hopes to launch this and two other bidding rounds before the end of 2023.
Minister of mineral resources & energy Gwede Mantashe said on Thursday that his department is finalising governance approvals for the release of bid window 7 of the Renewable Energy Independent Power Producer Programme (REIPPP), an inaugural gas-to-power bidding round and bidding round 2 of the battery storage programme.
“[We] are in the process of finalising procurement for additional generation capacity under bid window 7, the gas-to-power round and the next battery storage round. Further announcements will be made in the next two weeks,” he said.
Mantashe was speaking at the announcement of the appointment of four preferred bidders in the first battery storage round in Pretoria. The four battery storage projects, which will add about 500MW of capacity, are expected to reach commercial close by May 2024.
In bid window 6, the department of mineral resources & energy, under whose authority the Independent Power Procurement (IPP) Office falls, issued a call for proposals for 5,200MW of renewable energy generation capacity but ended up procuring only about 1,000MW of solar power capacity and no wind power.
This was due to a lack of available grid access capacity to connect more projects to the grid in the Western Cape and Northern Cape, where most of the projects in the bids that were submitted would have been located.
Bid window 7, which is expected to go to market searching for 5,000MW of wind and solar generation projects, has experienced delays, mainly because of uncertainty over available grid capacity.
Since the government first started procuring power through the REIPPP in 2011 about 12,000MW has been signed on for development over six rounds. So far, about half of the procured capacity has come online and the other projects are still being developed.
In construction
In an update on outstanding projects from previous bidding rounds, Mantashe said nine projects under bid window 5 of the REIPPP have now reached commercial close and are in construction. “Three more projects are expected to reach commercial close in due course. In total, these projects will add a further 1,234MW to the national grid from 2025,” he said.
According to Mantashe, the six preferred bidders appointed in December 2022 under bid window 6 are still finalising all conditions they had to meet to reach legal and commercial close. “The unavailability of grid capacity is a major constraint faced by all projects, resulting in delayed project closures,” he said.
Eskom’s latest generation connection capacity assessment (GCCA), which was published at the end of October, showed there was no grid capacity available in any of the three Cape provinces. These areas remain in high demand due to their abundant energy resources for renewable generation. Across the rest of the country there was about 20,000MW of available capacity, mostly located in Mpumalanga, Gauteng and KwaZulu-Natal.
Apart from recommending that developers focus on areas with remaining grid capacity, the GCCA confirmed that studies have been undertaken to implement planned curtailment (the mandatory reduction of power output) as a means of providing an “alternative option” for connecting new generation projects in areas with no transmission network availability.
Speaking at the same event on Thursday, the head of Eskom’s transmission division, Segomoco Scheppers, said the curtailment framework is now before the National Energy Regulator of SA (Nersa) for approval.
To ensure fair access to available grid capacity, Eskom published interim grid allocation rules earlier in 2023, which are expected to provide clarity to the market and ensure the reduction of delays in allocating grid capacity to renewable energy projects.
Some progress has been made in moving the approved projects under the Risk Mitigation IPP Procurement (RMIPPP) round to commercial close. On Thursday project agreements were signed for the Mulilo Total Hydra Storage Project, which will be located near De Aar in the Northern Cape and add 75MW through solar and battery storage.
The project is expected to reach commercial close by mid-December and will start the 24-month construction phase in early 2024.
However, five of the 11 projects appointed under the risk mitigation programme have still not reached commercial close and time is running out to get these projects over the line. This includes three projects from Karpowership SA to provide 1,220MW for 20 years via power ships moored in Coega, Richards Bay and Saldanha.
The contracts, awarded in March 2021, have been the subject of controversy and legal challenges relating to the cost and duration of the projects as well as concerns about their environmental impact.
“The remaining five preferred bidders under RMIPPP have until end-December 2023 to reach commercial close, and further announcements will be made in this regard in due course,” Mantashe said.
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