High competition for grid access in SA’s renewable IPP programme

21 August 2012 – The director general of South Africa’s department of energy, Nelisiwe Magubane, says that local content is the key to the country’s renewable energy independent power producer (IPP) programme because of its importance in driving manufacturing and employment. This programme is to add 3,725 MW of renewables generation capacity in South Africa, with 2,460MW of this capacity already allocated to 48 bidders in a competitive bidding programme.

The bidding programme so far has seen two out of a possible four bidding windows completed. “Given the current unemployment rates, the country has high expectations from the programme in terms of job creation. It is important that each bid submitted demonstrates value for money as per the provision of the new generation capacity regulations,” Magubane says.

Magubane notes that there is high competition for grid connection among developers and this competition will be even tighter in the upcoming bidding windows. “Capacity availability will continue to be a consideration during the evaluation process.”

He also says that the approval for the approval for the financial close for the first round of renewable energy IPP projects took longer than anticipated. “It is a learning process for the department as well but I believe the approval processes for the subsequent windows will be smoother and on time. I would like to assure that the department is working hard together with the affected departments to finalise the required approvals for window one financial close. The financial close date will be announced soon and window one preferred bidders should be ready to sign the necessary agreements.”