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Against the odds, solar-plus-storage project emerges with lowest RMIPPPP bid

23rd March 2021

By: Terence Creamer

Creamer Media Editor


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The fact that a hybrid generation project – combining solar photovoltaic (PV), a battery energy storage system (BESS) and a small portion of gas – emerged with the lowest evaluation price in the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) has been described as “remarkable” in light of the scheme’s design.

Projects selected for a 20-year power purchase agreement under the RMIPPPP must be able to operate between 5:00 and 21:30, have load-following ability and be connected to the grid before August 2022.

On March 18, Minerals Resources and Energy Minister Gwede Mantashe named eight preferred bidders under the RMIPPPP, including the 150 MW ACWA Power DAO project, which had an evaluation price of R1 462/MWh.

The hybrid project was one of three renewables-BESS projects selected, with a further hybrid project, involving a combination of solar PV and liquefied natural gas, also selected.

Speaking during a RES4Africa webinar on Tuesday, Harmattan Renewables director Chanda Nxumalo estimated that a total of 430 MW/1 300 MWh of private BESS would be deployed under the RMIPPPP, with some of the BESS systems likely to be among the biggest yet to be installed globally.

That said, 1 220 MW of the 1 845 MW selected was awarded to Karpowership, the owner of a fleet of floating power plants, including for two 450 MW projects in Coega and Richards Bay respectively and a further 320 MW project to be deployed at Saldanha Bay.

The award had already sparked some opposition with one environmental group, Green Connection, having already indicated that its legal team would be probing the award and would also request Mantashe to provide “substantiated reasons for his decisions”.

The evaluation price for the Karpowership project at Coega, in the Eastern Cape, was the second lowest bid under the RMIPPPP at R1 468.87/MWh, with the evaluation prices for Richards Bay and Saldanha Bay reported at R1 496.03/MWh and R1 686.48/MWh respectively.

The evaluation prices for the other independent power producer (IPP) projects were: R1 550.34/MWh (128 MW Oya Energy Hybrid Facility); R1 721.64/MWh (75 MW Umoyilanga Energy); R1 885.37/MWh (197.76 MW Mulilo Total Coega); and R1 515.97/MWh (Mulilo Total Hydra Storage).

The IPP Office has also indicated that it was in “value for money” negotiations with a further bidder for an addition 150 MW.

South African Energy Association chairperson Mikhail Nikomarov, who is also Bushveld Energy CEO, said the fact that a PV-BESS project was the lowest bid demonstrated that renewables-plus-storage solutions were already competitive, despite the fact that the domestic BESS industry was still at a nascent stage of development.

The BESS-linked bids would have been even more competitive, Nikomarov added, had the bidding rules permitted partial charging from the grid. As a consequence, the renewable plants and the BESS solutions had to be oversized to meet the RMIPPPP’s dispatchability requirements.

South African Photovoltaic Industry Association chairperson Wido Schnabel argued that it was a positive sign that the renewables-linked bids were competitive at all in light of the fact that the RMIPPPP architecture had been so heavily weighted in favour of gas.

“For a pure gas tender, it was remarkable to see renewables compete and with such good prices,” Schnabel averred, adding that he hoped that future bid windows would seek, instead, to exploit the strengths of each individual technology so as to lower overall system costs.

South African Wind Energy Association CEO Ntombifuthi Ntuli said that the bid windows arising from the recently gazetted Ministerial determinations pointed to a procurement roadmap that sought to secure the best tariff and economic development outcomes from each technology, rather than the “technology agnostic” model used under the RMIPPPP.

The determinations indicate that government plans to procure 11 813 MW of new capacity from IPPs over the coming three years, including: 4 800 MW of wind, 2 000 MW of solar PV, 1 500 MW of new coal, 3 000 MW of gas and 513 MW of battery storage.

Mantashe reported that four more requests for proposals (RFPs) would be issued within the coming 12 months, following the release of the RFP for the fifth bid window (BW5) of the Renewable Energy Independent Power Producer Programme (REIPPPP) on March 19.

Nxumalo said that RFPs for REIPPPP BW6 and BW7 should be released in September this year and February next year and that the RFP for energy storage could be released in September or October this year.

Nikomarov said that the upside potential for storage, including BESS, was arguably larger than the 513 MW allocation outlined in the Integrated Resource Plan of 2019, as it was as yet unclear whether that allocation included Eskom’s BESS roll-out and the co-located BESS ambitions of various municipalities.

In addition, he expected that many of the large consumers currently considering distributed-generation investments could, in time, also add BESS to these projects, which were predominantly solar PV in nature.

Various BESS technologies would be deployed in the coming years, but owing to the short lead times involved with the RMIPPPP,  Nikomarov anticipated that most of the hybrid projects would employ lithium-ferro-phosphate batteries.

It was possible, however, that nickel-manganese-cobalt or nickel-cobalt-aluminium batteries could also be deployed.

Edited by Creamer Media Reporter



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