20 August 2012 – South Africa’s renewable energy independent power producer (IPP) programme has attracted a lot of interest locally and internationally, says the country’s minister of energy Dipuo Peters.“When we made the decision to discard arenewable feed-in tariff (Refit) mechanism in favour of a bid process, the country received sustained criticism from the sector.Since then, the situation has made a significant turn, predominantly in favour of the bid process. I don’t think it would be wrong to suggest that the consideration of challenges and the assessment of the prevailing environment and global trends have paid off.”
According to South Africa’selectricity regulation Act of 2006, the procurement of new generation capacity must be transparent and competitive and Peters says that South Africa’s current renewable energy IPP programme is one of the most transparent in the world.
She also reaffirms that a key component of the country’s plan to diversify its electricity generation mix remains a firm commitment to renewable energy, to the tune of 17,800MW. “I would like to reaffirm our commitment to the policy direction and thorough implementation of the country’s integrated resource plan (IRP).As government, we must also reaffirm our position that there is space for both public and private sector participation in the energy sector in this country, and that we foresee a situation that most of the renewable energy projects, as per technologies listed in the IRP will be undertaken by IPPs, through a transparent and competitive programme, whilst allowing for a process of learning and innovation.
“In consultation with the National Energy Regulator of South Africa, and in terms of the Electricity Regulation Act, I determined that 3,725MW of new generation capacity must be procured by from IPPs through renewable energy technologies.Through two successful bidding windows, we have allocated a total of 2,460MW to 48 preferred bidders. There remains 1,165MW available from this determination for the third window. Given the interest in the programme, and the overtly positive response from the industry, I am convinced that these megawatts will beinsufficient, but I also believe that this reality will heighten the competitiveness and quality of the bids during the forthcoming round.
“I am currently considering a second determination which will provide additional MWs to the programme, through the required internal processes.My decision in this regard will be guided by the need to create a rolling programme which will provide for sustainable employment through local manufacturing, especially in the key components for solar and wind power generation.
“I also believe that a decision around a second determination, together with the IRP, will give the necessary comfort for the private sector to invest in manufacturing plants in South Africa.
We must reiterate that this programme must contribute to the growth of local content, and it must promote local manufacturing. This remains a critical non-negotiable, and one that we will track and monitor diligently.”
Peters says that while the department of energy recognises that it is important to review the country’s IRP periodically she believes that the underlying assumptions for the current IRP remain the same. “We however need to take the necessary decisions pertaining to the building of the required base load plants as provided for in this plan. In view of this, I am currently considering a determination to give effect to the building of the base load power plant as per the MW allocation provided for in the IRP.
“Furthermore, and in response to the current electricity constraints, I am also considering another determination for the Medium Term Risk Mitigation Plan as provided for in the IRP. This will include cogeneration and other related generation plants. These determinations will present further opportunity for IPP participation in electricity generation, and I will make an announcement in this regard soon.”