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Deadline for latest battery procurement also extended as IPPs adjust to Eskom’s new grid access rules

9th May 2024

By: Terence Creamer

Creamer Media Editor

     

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The deadline for South Africa’s recently launched third battery energy storage bidding round, or bid window three (BW3), has been extended by three months to October 31, following a recent deadline extension for the concurrent second battery bidding round from April 30 to June 6.

Independent Power Producer (IPP) Office head Bernard Magoro indicated during a Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP) briefing that the BW3 extension had been granted on May 8, following requests from prospective bidders and amid ongoing congestion in securing grid-access cost estimate letters (CELs) from Eskom.

An IPP requires a grid CEL to submit a compliant bid and is able to apply for a budget quote only once selected as a preferred bidder.

Magoro also announced a two-month extension, from six to eight months, for IPPs to achieve commercial close after the BW3 preferred bidders were selected; a milestone currently scheduled to take place two months after the October 31 submission date. Commercial operation is then expected within 24 months from commercial close.

The revision to the schedule has been made to provide IPPs with sufficient time to fulfil the conditions for commercial close in light of the fact that under the prevailing Interim Grid Capacity Allocation Rules, or IGCAR, it is taking Eskom six months to complete the processes required for advancing the CELs to grid connection budget quotes.

Despite the extensions, the IPP Office urged prospective BESIPPPP BW3 bidders, as well as those participating in other concurrent public procurement processes, not to delay too long in approaching Eskom with CEL applications, as the Eskom Grid Access Unit was currently inundated with applications for both public and private projects.

The realignment of the timeframes for BESIPPPP BW2 and BW3 follows a series of other delays to South Africa’s procurement for renewable energy, gas-to-power (GtP) and storage since the resumption of public procurement in 2020, including the seventh renewables bid window, the deadline for which was recently extended from April 30 to May 30.

The resumption of public procurement followed a protracted period of disruption, precipitated when the-then Eskom leadership declared in 2015 that the utility, which is the single buyer of electricity procured through the public framework, would no longer conclude contracts with renewables generators on the basis that it had sufficient generation capacity.

South Africa subsequently experienced extreme levels of electricity disruption on the back of supply shortfalls, with rotational power cuts peaking in 2023, when Eskom implemented over 16 500 GWh of loadshedding across more than 330 days.

Besides BESIPPPP BW2 and BW3, the seventh renewables bidding round is currently under way as well as South Africa’s inaugural GtP public procurement bid window.

Magoro reported that procurement programmes involving 8 231 MW of new generation and storage capacity were currently under way, against 7 335 MW of IPP capacity in operation.

A further 1 897 MW of wind, solar PV and hybrid capacity was under construction and 1 153 MW of solar PV and battery storage was expected to advance to commercial close before the end of 2024.

FIVE FREE STATE SITES SELECTED

The BESIPPPP BW3 request for proposals (RFP) is seeking bidders for 616 MW/2 464 MWh of battery projects to be equally spread, at 123 MW apiece, across five pre-selected substation sites in the Free State, including Harvard, Leander, Theseus, Everest and Merapi.

Eskom, which has selected the sites using various criteria, remains the single buyer under what will be 15-year power purchase agreements. The battery facilities will also be dispatched by Eskom as the system operator and are expected to provide not only capacity and energy but also ancillary services.

The RFP does not specify the battery technology to be used, but insists that the facilities be capable of operating continuously at the contracted capacity for four hours and be designed for 730-equivalent  cycles a year. They are also required to have a round-trip efficiency of at least 70% and be able to ramp up from zero to contracted capacity within 400 milliseconds.

The tender will be evaluated using the 90-10 principle, with 90% of the score based on the price and 10% on economic development.

The IPP Office has also included scope to appoint reserve bidders, which could replace a preferred bidder should such a bidder fail to reach financial close. Reserve bidders have the right, but not the obligation, to maintain their projects at a level where the project can immediately step in should a preferred project fail to advance to construction.

The price that will be used for the evaluation will be based on various factors, including the IPP’s capital cost recovery charge rate, a rapid voltage charge, which will be largely determined by the distance of the facility to the substation, the battery’s round-trip efficiency, its charge/discharge cycles and an energy input tariff of R518.89/MWh.

Magoro welcomed the ongoing interest in the BESIPPPP, noting that more than 300 people participated in the virtual briefing outlining the approach being taken under the BW3 RFP.

Edited by Creamer Media Reporter

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