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Eight IPPs to plug over 1 800MW to power grid

More bidders expected to be announced following evaluation process.
Minerals and Energy Minister, Gwede Mantashe. Image: GCIS

Minerals and Energy  Minister, Gwede Mantshe says the eight companies chosen to participate in the government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) are set to provide 1 845 megawatts of power to the country’s electricity grid. 

Power procured from the independent power producers (IPPs) is expected to meet the country’s short-term electricity supply gap from a combination of renewable energy including solar photovoltaic power, liquified natural gas and battery storage. 

Power procured will be fully operational and connected to the national grid by August 2022.

Three more companies, which are expected to provide an additional  150MW  in renewable energy are expected to be announced once further evaluations are conducted on their bid proposals, Mantashe said during a media briefing on Thursday. 

The eight companies are:

  • Turkish-based renewable energy company,  Karpowership (Karpowership SA Coega, Karpowership SA Richards Bay, Karpowership SA Saldanha),
  • Cape Town based power company Mulilo Total (Mulilo Total Coega, Mulilo Total Hydra Storage),
  •  Oya Energy Hybrid Facility (developed by G7 Renewable Energies) 
  • Umoyilanga Energy and,
  • Saudi Arabian- based power company,ACWA Power Project DAO. 

51% of these companies are South African owned, with 41%  black ownership. The companies are expected to reach financial close ( period within all financial obligations are reached) by July this year, a date which Mantashe said is non-negotiable given the urgent to bring power online. 

The government issued a request to procure power from IPP’s in 2019 in line with the Integrated Resource Plan (IRP) which calls for the country to procure electricity from a diverse energy mix to lessen the country’s reliance on coal-generated power. 

Not slow

The minister denied that the government has been slow in implementing the IPP programme given the country’s decade long electricity crisis. 

Read: Eskom entitled to delay IPP signing – Nersa

“We are supplementing the energy from Eskom and not waiting until Eskom is perfect to generate more energy…We are almost supplying [the equivalent of] two power stations already and we are going to grow that capacity,”Mantashe said. 

By the time the government completes its program to procure 11 800MW of power from IPPs 6 800MW from solar and wind, 513MW form battery storage, 3000MW from gas and diesel and 1 500MW from coal)  it would be the equivalent of 11 power stations according to Mantashe. 

The procurement falls under the much anticipated Bid Window Five or Section 34 determinations which were gazetted in September last year. 

The first round of bidding for the Section 42 determinations will open at midnight (March 19 2021) with the closing date for submissions being August 4 2021.

“Of the 2 600 megawatts from this Bid Window 5, 1 600 megawatts will be from wind and 1 000 megawatts from Solar PV,” Mantashe said.

Complex task

DMRE director-general, Thabo Mokoena added that the delay in the process to choose the eight preferred bidders for the IPP program was in part due to the “complexity” of the program.

The department procured the services of independent transaction advisors to ensure that the process to choose the bidders remains fair. 

“The requirements are exactly the same for all the bidders…All bidders were treated exactly the same,” he said. 

Mantashe said the government had received 28 bid responses following the request for proposal indicating that there is a “sustained private sector interest in participating in the South African energy landscape.”

Although the power generated from IPP’s is expected to come onto the grid next year, it is anticipated that the new power will go some way to alleviating the electricity supply crisis.

Eskom is unable to run its fleets at full capacity — with even its new plants failing to operate at capacity on a sustained basis.

Read: Covid impacts Eskom’s turnaround

Read: Eskom CEO: Power shortfall could increase as economy grows

Read: Medupi and Kusile design modifications: Progress and problems

“The prices for the proposed solutions range fromR1 468 per MWh to R1 885 per MWh The weighted average price is R1 575 per MWh,” Mantashe said. 

It’s anticipated that 3 800 job opportunities will be created during the 18 month construction period and a further 13 500 during the 20-year Power Purchase Agreement (PPA) term. The projects will inject an estimated R45 billion into the economy. 

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Now we hope for perfect sunny and windy days.

It is unclear to me that any of these are renewable. IPP yes : renewable no.

But hell yes : if it helps getting rid of loadshredding and is priced around half what the damned hairdresser diesel peakers cost – go for it!

Ok so 51% South African, 41% Black owned company. How much ANC Cadre %?.

So Mantashe thinks 11800MW are equivalent to 11 power stations? I have (bad) news for him.

0 to 8 in 60 seconds.

Sounds too good.

ANC share? History tells us they have a hand in the pie?

You can bet, senior family and friends from government will be involved separating the cream to themselves.

Several of these projects rely on LNG and environmental approvals. The EIA are nor in place with fierce resistance ongoing.

E.g. Karpower ships and Mulilo. We dont have LNG in country and as far as I can tell Transnet has been blocking all private LNG for years as has government. So at least 4 of the 8 are iffy in terms of financial close by July.

The only ones that may go ahead are the solar hybrid as the EIA was probably in place from previous rounds of bidding.

As to the comments on solar and wind……Eskom stops load shedding on days the sun shines brightly so it has some effect

6 years these fools have sat on their hands doing nothing.

The MD of a wind company told me that there were 65 projects sitting on a desk at Eskom waiting to be signed. Zuma holding things up again.

Stages 2 to 7 of a certain windfarm that has had all the enviro etc approvals since 2013 does not feature here but 3 to one company is listed???? ANC again something stinks as usual.

After 10 days of yo yoing between stage 1 and 2 Eskom can supply power to the whole country for 4 straight hours just because they think the country wants to see an archaic dictating “monarch” being honoured, then we go straight back to stage 2. How did they do that?

If the IPPs had been built from 2013 onwards they could happily shut off most of their broken plants all day and tinker with them while the turbines and panels kept us going.

The ANC will certainly go down in history in the how not to section.

Sorry forgot they don’t believe in history they write it as they like to see it. And the world forced us to give them this country…….

We have a blackout scene now and by instituting these alternate power generating units they will not be fully functional for 18 months.
There is not a single complementary statement that one can make about this government

How does the financing work? Is the taxpayer providing any capital?

You cannot trust the companies that the ANC gets into bed with.

I am reliable informed that the Turkish are going to rename their ships the Reijer, the Dromedaris, and the Goede Hoop!

I still can’t wrap my head around the common perception that storage, be it battery or pumped-hydro or whatever, is considered to be additional generating capacity. It’s not like they provide energy without charging them up 1st!

And presumably the BEE compliance with regards to these power ships is of the usual sort. Where some politically connected cadres and the ANC as a party are the benefactors.

BEE compliance unfortunately means a cut for the cadres….

End of comments.

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