An announcement made this week of the 19 preferred bidders for the second phase of the Department of Energy’s Renewable Energy Independent Power Producers (REIPP) programme, demonstrates the South African government’s clear intention to forge ahead with this vital initiative.
“The award of preferred bidders in Phase II represents the next step in the country’s renewable energy journey and also builds much needed momentum in the establishment of South Africa’s green economy.” This is according to Mike Peo, head of Infrastructure, Energy and Telecoms at Nedbank Capital, which served as investment partner to 39% of the successful phase II REIPP bids by allocated capacity.
According to Peo, the announcement of the preferred bidders will go a long way towards easing any lingering doubts that may still exist regarding government’s commitment to its integrated resource plan as an integral component of its overall Renewable Energy vision for South Africa.
successful infrastructure & capacity development essential
“The imminent finalisation of Phase I and launch of Phase II of the REIPP programme is very much a stake in the ground by national government,” says Peo, “and sends a clear message to local and international stakeholders and investors – not to mention the general public – that the vision of a South Africa powered to a larger extent by renewable energy, is destined to become a reality.”
“The sustainable success of the Integrated Resource Plan rests heavily on the country’s capacity to develop its renewable energy infrastructure and capacity,” explains Peo, “which will almost certainly translate into long-term employment creation and the continued up skilling of this labour force.”
He also points to the already significant investment made into South Africa by global renewable energy manufacturers and investors as evidence of the economic growth potential created by the forward momentum of the programme. “We are seeing growth in the establishment of renewable energy capacity,” he says, “and as these come online, they will give rise to numerous upstream and downstream production, manufacturing and service opportunities.”
Long-term economic and social upliftment
Peo is also very positive about the long-term economic and social upliftment potential inherent in the renewable energy programme. “Unlike almost all of South Africa’s previous infrastructure development projects, the development of the country’s renewable energy industry is not a finite project,” he enthuses, “it need not have an end date and we expect further announcements from the Department of Energy in this regard.”
He even envisages South Africa ultimately using its learning and experience over the next few decades to transform itself into a renewable energy hub for the rest of the African continent.
“While the immediate priority is the successful establishment of a viable and robust renewable energy sector, stakeholders in this fledgling sector should never lose sight of the fact that what we do here in South Africa could ultimately be of great benefit to the whole of Africa,” he concludes, “which makes it even more important that the momentum that has been established be maintained in order to achieve the vision we all share for a green-powered future.”
Government focus sharpening now
The announcement of 19 successful bidders for the second phase of the renewable energy independent power producers’ programme got a thumbs-up from the industry on Monday.
“We acknowledge the excellent work done by government in working through the voluminous applications in a timely and transparent manner,” said Johan van den Berg, chief executive of SA Wind Energy Association.
The department received 79 bids in March for the second window of the energy plan, 51 of which met the criteria given in the request for proposals. These bids amounted to 3255 megawatts of power generation.
9 solar PV, 7 wind, 2 hydro and 1 CSP
Nine solar PV bidders were selected with a combined allocation of 417.1 MW against an allocation of 450 MW. There were also seven wind projects selected, representing 562.6 MW (650 MW), two small hydropower projects of 14.3 MW (75 MW) and one 50 MW CSP (concentrated solar power) project, which matched the allocation cap available.
The nine solar PV bidders identified were: the 75 MW Solar Capital De Aar 3, the 74 MW Sishen Solar facility, the 9 MW Aurora project, the 8.8 MW Vredendal project, the 36.8 MW Linde project, the 69.6 MW Dreunberg venture, the 75 MW Jasper Power Company development, the 60 MW Boshoff Solar Park and the 8.9 MW Upington Solar PV plant.
The wind projects listed included: the 135.2 MW Gouda wind facility, the 137.9 MW Amakhala Emoyeni (Phase 1); the 94.8 MW Tsitsikamma Community wind farm, the 90.8 MW West Coast 1 project; the 23.4 MW Waainek venture, the 59.8 MW Grassridge project, and the 20.6 MW Chaba project.
The two small hydropower preferred bidders were named as the 4.3 MW Stortemelk hydro scheme and the 10 MW Neusberg hydroelectric project.
The 50 MW CSP project was named as the Bokpoort CSP project.
The average prices offered by the solar PV developers fell from 2.75 c/kWh in window one to 1.65c/kWh, while wind fell from 114c/kWh to an impressive 89c/kWh. The CSP prices fell slightly from 268c/kWh to 251c/kWh.
The second-window preferred bidders also offered superior local content terms, with solar PV rising to 47.5% from 28.5%, wind rising from 21.7% to 36.7% and the CSP projects rising from 21% to 36.5%.
However, Aphane confirmed that government would be seeking even better pricing and economic development terms than had hitherto been the case.
Final closure 13 December
The preferred bidders identified during the second bid window had until December 13 to take their projects to financial closure.
Energy Minister Dipuo Peters told reporters on Monday the government wanted to use the renewable energy independent power producers’ programme to boost job creation.
“With significant numbers of the population currently unemployed, the government sees this procurement programme as an opportunity to grow the economy,” she said in Pretoria.
“We would want to maximise economic development wherever the projects are located.” The independent power producers programme is expected to attract project proposals valued at around R100 billion by the end of the final fifth window.
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1. Elizabeth Dipuo Peters, South African Minister of Energy. Source: Independent Newspapers
2. Johan Van Den Berg, the chief executive officer for The South African Wind Energy Association. Source: Engineering News