The Department of Energy (DoE) announced on Thursday that it expected to begin concluding outstanding financial-closure agreements with the first 28 wind and solar bidders named in December as preferred bidders under the Renewable Energy Independent Power Producer Programme (REIPPP) from the middle of next week, and that it aimed to complete the process by the end of August.

The signing, which was initially scheduled for mid-June, would open the way for the construction of projects representing a collective investment value of around R46-billion and a collective capacity of 1 415 MW. Under the REIPPP, the DoE was seeking to procure 3 725 MW of renewable energy capacity for delivery between 2014 and 2016.

However, the director-general Nelisiwe Magubane also indicated at a bidders' conference in Johannesburg that the DoE would be sending requests to bidders for an extension of the bidding period beyond the August 31, 2012 bid validation period – effectively cautioning the financial-close period could well extend beyond that date.

She indicated that the delay had related primarily to internal authorisation processes within government, including the firming up of government guarantees for Eskom, which would be the buyer of the power over a 20-year horizon. She said the readiness of bidders to close would only become apparent once it moved towards actual signing.

It is understood that agreements involved copious amounts of information and were complicated further by the fact that bidders would be approaching financiers to align hedging arrangements with the actual financial-close date. Therefore, those close to the process warned that it was unlikely that all 28 projects would be cleared by the end of August.

Energy Minister Dipuo Peters said the process had been ground breaking, but that every effort was being made to advance the window-one projects towards closure.

It was also indicated that the bid closure date for the third window had been maintained as October 1, 2012, and that the financial closure deadline of December had been sustained for the 19 window-two bidders, which were named earlier this year.

Peters also announced that she would be issuing a further declaration “soon”, extending the amount of capacity to be procured beyond the 3 725 MW already in process.
 

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