Mining group Exxaro has confirmed that its coal-based Thabametsi independent power producer (IPP) project has been excluded from its new energy joint venture (JV) with Tata Power, dubbed Cennergi, but that it remains keen to move ahead with the development.
In fact, Exxaro executive GM business growth Ernst Venter has revealed that the project was submitted in response to a recent request for information (RFI) issued by the Department of Energy (DoE) and the National Treasury.
Energy Minister Dipuo Peters has reported that government received project information representing a combined 60 300 MW of potential cogeneration, coal-fired, gas-fired, hydropower and import power options that could be introduced to the domestic grid by March 2019.
The plant could source its primary energy from the JSE-listed group’s proposed greenfield Thabametsi coal mine, adjacent to its giant Grootegeluk mine, in the Waterberg region of the Limpopo province, and could produce 1 200 MW.
Venter reveals it has received strong interest from potential IPP operators, as well as from offtakers keen to shore up their supply in light of South Africa’s current supply-side constraints.
It has also held extensive discussions with State-owned power group Eskom on ‘wheeling’ that power through the utility’s transmission network to its customers.
The project initially emerged when Eskom issued its own RFI for baseload IPP projects. But that initiative was abandoned, owing to policy, regulatory and funding obstacles.
Exxaro believes the new government RFI to be indicative of an increasing seriousness about adding baseload IPP capacity, along with the 3 725 MW of renewable energy capacity currently being procured.
However, Venter acknowledges that several regulatory and policy impediments remain and will have to be ironed out ahead of any possible procurement phase.
“A lot of progress has been made in these areas over the last year . . . and Eskom is collaborating to help create the right environment for IPPs to hook on to the line.”
That said, Venter still believes the creation of an independent market and system operator will be key over the longer term to levelling the playing fields between Eskom and potential private operators.
Exxaro is not the only mining company considering coal-fired power options, with both Anglo American and Xstrata pursuing discard-coal IPP projects.
Meanwhile, the group’s Cennergi JV with Tata Power has also submitted baseload projects in response to government’s RFI. They related to potential hydropower developments in the KwaZulu-Natal and Eastern Cape provinces.
CEO Thomas Garner stresses that the new entity will not only pursue renewable energy projects, but will also seek to develop, or acquire, coal and gas assets in South Africa, Namibia and Botswana.
However, its initial focus is the renewable energy IPP procurement programme and Garner confirms that wind and solar bids have been submitted for the second tender window, which closed on March 5. An announcement on the second group of preferred bidders is expected on May 14.
Cennergi has five renewables projects at a relatively advanced stage, including the 11 MW Letsatsi solar project, in the Northern Cape, the 30 MW Lephalale solar plant, in Limpopo, the 40 MW Tiqua wind farm, in the Western Cape, and the 95 MW Tsitsikamma and the 139 MW Amakhala Emoyeni wind projects, in the Eastern Cape. However, Garner says he is unable to disclose which of the projects were tendered to the DoE and the National Treasury.