The South African government has confirmed that price competition will feature in the procurement process for the first round of renewable energy projects, with the 2009 renewable energy feed-in tariffs (Refit) to be use as a “ceiling” price against which potential developers should tender their offers.
Department of Energy (DoE) director-general Nelisiwe Magubane reported on Monday that Energy Minister Dipuo Peters had signed off on the bid documentation, and that the only outstanding matter was confirmation from the National Energy Regulator of South Africa (Nersa) that it concurred with the determination.
Once that concurrence was gained, the department and the National Treasury would officially release the tender, along with the selection criteria, which would include a pricing dimension. Other criteria likely to be included could be project technical viability, localisation, job creation, grid connectivity, environmental acceptability and local economic development spinoffs.
Potential wind and solar developers have objected to suggestions, which emerged over the last few months, that the Refit would be abandoned in favour of a process that includes an element of price competition on the basis of the fact that projects had been premised on the 2009 promulgated rates.
However, Magubane said that the enthusiastic response to its September 2010 request for information (RFI), during which projects representing a total of 20 000 MW were proposed, had indicated that there was scope for some price competition in the first round for 1 025 MW of renewable projects.
She added that in interactions with potential developers many had indicated that the industry was “not fazed” by the prospect of price competition, despite reports to the contrary.
However, the South African Wind Energy Association (Sawea), the South African Photovoltaic Industry Association and the Southern Africa Solar Thermal and Electricity Association put out a joint press statement last week in which they argued that the abandonment of the Refit amounted to a “shifting of the goalposts” by government.
The bodies were now pinning their hopes on a rejection by Nersa of the Minister’s determination.
However, Nersa would only confirm receipt of the determination and told Engineering News Online that it was still "working on it". It also indicated that its adjudication could focus on funding matters and ensuring that funding was aligned with the technology choices.
Sawea CEO Johan van den Berg told Engineering News Online that, while he was aware of government’s intention to include price competition, its members did not believe the tender could be published without Nersa’s consent.
He said the association was, thus, still hoping for a “good result”, which would premise the bidding process on the 2009 Refit as had been promised by government over the last two years.
Sapvia’s chairperson Chris Haw echoed these sentiments, noting too that the body’s members were concerned by possible eleventh-hour changes to the Refit.
Haw also felt that Nersa might reject the determination. However, he said that whatever the outcome, his members were keen to be consulted and for government to offer due recognition for the “time, money and effort” already spent in preparing projects on the basis of the 2009 Refit.
Van den Berg also felt that government was being disingenuous to directly link the 20 000 MW garnered under the RFI to actual project potential, as many of the proposed projects were “mutually destructive”, primarily owing to grid-connectivity constraints. By contrast, the interest expressed was directly attributable of the Refit rates offered.
Magubane said that as soon as Nersa’s consent was gained, it would publish the bid documents, while Minister Peters said she remained confident that the first 1 025 MW would be available by 2013, as per South Africa’s renewable energy policy statement.