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Aug 16, 2012

Ministerial determinations on way to unlock baseload, renewables IPPs

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Energy Minister Dipuo Peters will issue determinations in the near future to kick-start a baseload independent power producer (IPP) procurement process, as well as extend the Renewable Energy Independent Power Producer Programme (REIPPP) beyond the 3 725 MW currently being procured for delivery by 2016.

Speaking at a REIPPP bidders conference in Johannesburg, Peters indicated that the determination would be in line with the Integrated Resource Plan (IRP) for electricity, which was published in March 2011.

The IRP envisaged the introduction of an additional 6 250 MW of non-Eskom coal-fired generation between 2014 and 2030, 2 370 MW of gas-based production between 2019 and 2030, an addition 3 910 MW of peaking capacity and the importation of 2 609 MW of hydroelectricity.

However, there was a strong push to raise the level of gas in the overall energy mix and a desire to integrate some of the potential capacity that emerged from a request for information (RFI) exercise. There was a strong response to the RFI, with developers submitting potential projects with a combined capacity of 60 300 MW, which they said could be introduced before March 2019.

Peters also confirmed that the REIPPP would be converted into a “rolling” programme and that additional renewables capacity would be added through an upcoming determination.

Again, no figures were provided for the next REIPPP phase, but the IRP suggests that 8 400 MW of wind, 8 400 MW solar photovoltaic and 1 000 MW of concentrated solar power (CSP) should be added by 2030.

However, director-general Nelisiwe Magubane indicated that there could well be adjustments to the technology allocations for renewables, stressing that local content and job creation would be critical in determining such adjustments. She also gave a strong indication that the allocation for CSP was likely to be increased under the new determination.

Government had also decided to retain the current bid-window schedule associated with the first REIPPP phase, which began in August last year – this notwithstanding a delay in finalising financial closure for the first 28 projects identified as preferred bidders in December.

The Department of Energy (DoE) was expecting to begin concluding outstanding financial-closure agreements with the first 28 wind and solar bidders named in December and hoped to complete the process by the end of August. But requests had also been made for an extension of the bidding period beyond the initial August 31 bid-validation period.

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.

The DoE had also named a further 19 bidders following the second window, raising the capacity allocated to the 47 preferred bidders to around 2 460 MW.

Therefore, until the REIPPP was enlarged through the issuance of a new determination there was only 1 165 MW still to allocate, with the third bidding window due to close on October 1.

The delay in reaching closure was attributed 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. Magubane said these issues would not arise during the subsequent windows, which was why the DoE was holding to its published schedule.

Peters also confirmed that the process to procure 100 MW of the 3 725 MW from small-scale IPPs will be launched before year-end.

She also said she would be issuing a further determination to accelerate aspects of the ‘Medium Term Risk Mitigation Plan’, which was associated with the IRP and included near-term actions to deal with South Africa’s prevailing power shortages, including the introduction of cogeneration projects.
 

Edited by: Creamer Media Reporter
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