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SA gearing up for fourth renewables bidding round

28th March 2014

By: Anine Kilian

Contributing Editor Online

  

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The third round of the suc- cessful Renewable Energy Independent Power Pro-ducer Procurement Programme (REIPPPP) would have a stag-gered financial close, with the periods possibly being a few months in duration leading up to July 2014, said law firm Webber Wentzel partner Karel Potgieter at the second yearly Renewable Energy Forum that took place at law firm Norton Rose Fullbright’s premises, in Johannesburg, earlier this month.

“This is of great benefit to projects, especially if early develop- ment work has been done and com- panies have finalised all their con- tractual arrangements,” he said.

Potgieter added that the alloca- tion of the additional round-three projects was currently a conten- tious issue, as there were promoters of round-three projects that had been informed their products were in the group of projects that fitted the financial criteria, but had not been allocated.

“Senior project adviser in the public–private partnership (PPP) unit of the National Treasury of South Africa and head of the finance desk Karen Breytenbach indicated that it would be better for projects to focus on the fourth bidding round,” he said, adding that the round-four bid submission date was fixed for August this year.

An updated financial reporting package in respect of the fourth bidding window would be available within the next two to three weeks.

“There is a concentrated solar power (CSP) biding window at the end of March, and Breyten-bach said that six projects had registered to submit bids. This is quite astounding, given that there is currently only 200 MW available,” Potgieter said, adding that it was going to be a substan-tially oversubscribed and com-petitive round.

He noted that there were many technical, financial and legal challenges regarding renewable energy going forward.

“South Africa is an attractive prospect with regard to its fiscal and legal certainty, but is also deemed slightly challenging in terms of guaranteed returns on investment. If a company looks beyond the South African borders, however, it might encounter regions in Africa that are less politically and economically stable and do not have the same legal and fiscal certainty as South Africa.”

Potgieter added that there were most likely hundreds of projects available and ready for bidding in the programme.

He added that State-owned power utility Eskom’s grid was also a major challenge, but that it was slowly improving.

As delays continue in Eskom’s new Medupi and Kusile coal-fired power stations, renewable energy appears to be bridging the gap created in energy deficiency. The South African Wind Energy Association reported last year that the third REIPPPP bidding round for wind energy had come in 30% cheaper than that of Eskom’s new coal build power.

“It seems that Eskom is playing catch-up with the renewables programme, as it was caught unaware of the volume of projects and megawatts that were going to be awarded and coming onto the grid on a yearly basis.”

Potgieter noted that, with the REIPPPP having turned into a yearly programme, Eskom had a real challenge in ensuring that its infrastructure was available.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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