HomeIndustry SectorsFinance and PolicySuccessful energy projects for bid window 5 announced

Successful energy projects for bid window 5 announced

Minister of Mineral Resources and Energy (DMRE), Mr Gwede Mantashe on Thursday night announced the preferred bidders for the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) Bid Window 5.

The 25 projects in this latest round of IPP procurement will eventually add 2,583MW of renewable energy to South Africa’s grid.

The request for proposals was issued in April 2021 and a commitment was announced at the time to make known the preferred bidders before the end of October 2021.

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The preferred bidders for bid window 5 will be expected bring their projects to financial close in the next six months and commercial close within the next three years.

The preferred bidders are:

  • Coleskop WEF (onshore wind)
  • San Kraal WEF
  • Phezukomoya WEF
  • Brandvalley Wind Farm
  • Rietkloof Wind Farm
  • Wolf Wind Farm
  • Beaufort West Wind Facility
  • Trakas Wind Facility
  • Sutherland Wind Facility
  • Rietrug Wind Facility
  • Waaihoek Wind Facility
  • Dwarsrug Wind Facility
  • Grootfontein PV 1
  • Grootfontein PV 2
  • Grootfontein PV3
  • Grootspruit Solar PV Project
  • Graspan Solar  Pv Project
  • Sannaspos Solar PV Project
  • Du Plessis dam PV 1
  • Kentani Solar Facility
  • Klipfontein Solar Facility
  • Klipfontein 2 Solar Facility
  • Leliehoek Solar facility
  • Braklaage Solar Facility
  • Sonoblomo Solar Facility

“It is unfortunate that this announcement happens at a time when the country is experiencing loadshedding,” said Mantashe.

Bearing the cost of electricity

The DMRE Minister was at pains to separate the state utility Eskom’s responsibility to provide electricity to the country from his own department’s ambit of responsibility.

“Eskom sits in the Department of Public Enterprises. All these efforts are aimed at helping them, but we don’t walk in and out of there when there is a Minister responsible for Eskom.”

“The resolution of the problem isn’t primarily dependent on the renewable energy programme, but to correct Eskom. If we can’t resolve that, we can’t do anything.

“Loadshedding is not because of less connected capacity, it is because of the unavailability of generation capacity. Eskom is not efficient in running existing capacity,” said Mantashe.

Mantashe explained the weighted average price amongst this round of preferred bidders is R473 per MWh, which works out to a rate of 47c per unit of electricity.

“Normally we talk of the expense of generation of electricity and put a unit cost to be higher than the selling price. This happened with bid windows one, two and three. It happened to a lesser extent with bid window 4.

“Now, this unit prices is closer to Koeberg Nuclear Plant’s 40c per unit. This means that the price of wind and solar PV has come down lower, it is cheap now,” explained Mantashe.

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New renewable energy from bid window 5 onto a grid constrained by capacity

Mantashe pointed out this bid window 5 attracted projects in KwaZulu Natal and the Free State for the first time.

This current bid window round also means the Northern Cape and Western Cape have reached the saturation limit of what their transmission grids can handle when the new projects are added. Eskom will have to assess whether any further renewable energy projects can be added to these provinces without expanding the transmission and distribution lines.

The Minister said the proposed projects under bid window 5 would inject an estimated R50 billion into the South African economy, creating around 13,912 job opportunities.

The target of participation by South Africans in bid window 5 was 40% and this was oversubscribed at 49.2%. This bidding round also attracted 7% ownership of projects by black women and 44% commitment to local manufacturing targets during construction was achieved.

“These projects will make a big different to the communities in the vicinity of the projects,” said Mantashe, mentioning the preferred bidders have cumulatively committed R2.7 billion towards skills development over the lifetime of the various projects.

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Addressing baseload power needs

Bernard Magoro, IPP office head, assured that preferred bidders had complied with grid connection needs: “I must mention there were projects that were cheaper but unfortunately because of grid constraints they were not able to go through on this round.”

Jacob Mbele, DMRE deputy director, pointed out delays on the RMIPPP Programme are having an effect on when this power will eventually come online, but reminded that this particular programme asked for dispatchable power to address baseline power needs.

“Different technologies close the gap in different ways. Renewable energy gives you the energy component but not the capacity. So, in the evening when electricity peaks you can’t switch on the renewable energy capacity, so the Risk Mitigation Programme asked for dispatchable power, for the flexibility to switch on and off when the system requires,” explained Mbele.

“If you objectively assess the trend, we hardly loadshed during the day but then we loadshed twice at night. That should say something about the state of our baseload power and that should say something about renewable energy. At night we are short of supply because our baseload is weak.

“As we release request for technologies there will be a focus on improving or baseload. If we don’t have other technologies to help our baseload power, we will be heading for a disaster,” added Mantashe.

“We look forward to more competition when we issue bid window 6. We aim to do that no later than the end of January 2022,” said Mantashe, who also pointed out bid window 7 would probably start before the end of 2022. ESI

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Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.