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Sep 28, 2012

Fresh renewables delay, but DoE insists projects will be signed off in October

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Construction|Engineering|Johannesburg|Africa|Energy|Eskom|Projects|Renewable Energy|Renewable-Energy|Africa|South Africa|Energy|Dipuo Peters|Power
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The first 28 preferred bidders selected under South Africa’s Renewable Energy Independent Power Producer Programme (REIPPP) have again been formally requested to extend the validity of their bids to enable government to tie some final loose ends before signing off on the projects.

Under the original schedule, the projects, which were named by Energy Minister Dipuo Peters in December, were expected to reach financial closure by mid-June. But the process has been delayed to enable government to finalise a support framework for Eskom, which will purchase the power produced by the wind and solar developers.

Initially, bidders were requested to extend the validity of their bids until the end of September, but they have received a subsequent request to extend the validity to the end of October. Bidders had until the close of business on September 28 to indicate that they accepted the schedule change.

The Department of Energy’s (DoE’s) Ompi Aphane has confirmed with Engineering News Online that the request had indeed been made. But he insists that the internal government processes required to finalise a government support framework for Eskom are well advanced and that government should be in a position to begin signing-off on the first projects in the coming weeks.

The signing 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.

A National Treasury credit committee met to advance the matter on Thursday, September 27.

Aphane says it would be premature to comment on whether the “slippage” will result in a change to the published commercial operations deadlines for the projects, most of which are meant to be fully integrated into the national grid during 2014. The concentrated solar power projects have until 2016 to reach commercial operations.

Once all government approvals have been secured, Aphane says the focus will shift to establishing the necessary logistical arrangements for the signing of the various agreements, including the 20-year power purchase agreements with Eskom and the implementation agreements with government.

He anticipates that government will initially seek to sign two or three of these a day, and then move to accelerate the process once it becomes more accustomed to what is entailed. A central facility is likely to be established in Johannesburg to help streamline the sign-off.

In light of the first-window delays, the DoE has already confirmed schedule changes for the conclusion of the second-window process and the third bid-window submission date.

Financial close for the 19 second-round preferred bidders, initially set for December 2012, is now expected to take place between March 18 and 28, 2013.

A new third-window submission date of May 7, 2013, has also been confirmed, with the previous deadline having been October 1, 2012.

Through the REIPPP, government is aiming to procure 3 725 MW of renewables capacity, which leaves only 1 165 MW still to be allocated, owing to the fact that the current 47 preferred bidders have absorbed 2 460 MW.

However, it is possible that the DoE will approach the National Energy Regulator of South Africa during October for its concurrence on a new determination that could materially enlarge the allocation and convert the REIPPP into an ongoing procurement mechanism.
 

Edited by: Creamer Media Reporter
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