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