The next round of renewable energy procurement is a crucial step to get further significant green energy supply onto the grid quickly and reduce reliance on Eskom's ageing coal-fired power stations.
Mineral resources & energy minister Gwede Mantashe this week launched bid window 6 of the Renewable Energy Independent Power Producer Procurement (REIPPP) programme, saying 2,600MW of power would be procured in addition to bid window 5, which will reach financial close at the end of April.
“After three bid windows 7,800MW will come from renewables. All these must work together to improve our economy and develop the country,” said Mantashe.
Bid window 6 further increases the involvement of IPPs at Eskom, which has implemented load-shedding because of its ageing power stations being vulnerable to breakdowns after years of neglect.
The department of mineral resources & energy's IPP office said the latest request for proposals called for independent power producers to develop new generation capacity of 2,600MW, of which 1,600MW would be from onshore wind energy and 1,000MW from solar power plants.
The plants are expected to come on line two years after financial close.
“Given the energy challenges the country is facing, the qualification criteria 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 post commercial close,” the DMRE's IPP office said.
Energy finance analyst Simon Nicholas said Eskom and SA have no choice but to significantly increase reliance on renewables. Wind and solar were getting cheaper so reliance on renewables could help keep the cost of power down as well as progressively taking over from unreliable coal-fired power, he added.
“It seems increasingly unlikely that new coal power plants will be built in SA despite projects being indicated in the Integrated Resource Plan (IRP). Investment in expensive gas infrastructure risks exposure to stranded assets. If Eskom is to remain a significant player in South African power generation its long-term future will need to be based on renewables,” he said.
The launch of bid window 6 came days after a landmark climate change mitigation report by the UN's Intergovernmental Panel on Climate Change that called for a rapid phasing out of fossil fuels.
The report said that without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C would be beyond reach. Further installation of fossil fuel infrastructure would “lock in” greenhouse gas emissions and put 1.5°C out of reach. It said coal assets risk being stranded before 2030, while oil and gas assets are likely to be stranded towards mid-century.
It seems increasingly unlikely that new coal power plants will be built in SA despite projects being indicated in the Integrated Resource Plan (IRP)
— Energy finance analyst Simon Nicholas
Since the REIPPP was launched in 2011, IPPs have generated 66,756GWh of renewable energy. From October 2020 to September 2021, IPPs had contributed about 7% of SA’s total electrical energy, according to the DMRE.
Nicholas believes Eskom could also look to build its own renewable energy plants, and has plans to do so.
“Its debt situation is clearly a problem but there is the possibility of using some of the $8.5bn (R125bn) climate funding pledged by the US, UK, EU, Germany and France to kick-start Eskom's power generation transformation.”
SA relies heavily on Eskom coal-fired power stations, but its R392bn debt burden is a drag on the business.
Credit ratings agency Moody’s this week maintained its rating of Eskom at Caa1 with a negative outlook, saying this reflected the persistent downside risks to its credit quality, given its “high leverage, weak liquidity and poor operational performance”.
Prof Raymond Parsons of North-West University said Eskom needs competition, as the lack of energy security under Eskom’s long-standing monopoly has been the economy's achilles heel for many years.
Parsons said it is essential that the widening of renewable energy sources as outlined in bid window 6 be implemented promptly.
“Access to alternative sources of energy in SA must in general be developed in tandem with the proposed restructuring of Eskom, which will make it more efficient and sustainable in the longer run. Eskom still supplies more than 90% of SA’s electricity requirements, but needs to operate within a much more competitive environment.”
The National Union of Metalworkers of SA (Numsa) said it was concerned about the privatisation of energy generation.
Numsa spokesperson Phakamile Hlubi-Majola said the union is against the REIPPP because it enables the private sector to play a role in energy generation.
“This government is basically undermining our energy sovereignty; we should never have a situation where we depend on the private sector. But if you look at how they have deliberately destroyed Eskom, unfortunately this is the situation we find ourselves in. The fact that we have load-shedding is simply due to the failure of our Eskom management to do quality maintenance.”
Independent energy analyst Ted Blom said coal was a source of reliable power and an economy could not rely on renewables without coal-fired power stations.
“If you want to have renewables you have to have another plan because renewable energy is unreliable. It is called non-dispatchable today because if there are clouds there is no guarantee there will be renewable power. Renewable energy is fine for households, when there is not wind or sun there will be no power.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.