The announcement of the preferred bidders arising from the fourth bid window of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), scheduled for Monday November 24, has been delayed, Engineering News Online can confirm.
The delay comes after financial close for the 17 third bid window preferred projects was shifted out, owing primarily to grid connection problems.
Seventeen round-three preferred bidders were named on October 29, 2013, after 93 bid responses were received for an allocation of less than 1 500 MW.
The projects were initially scheduled to close on July 30, but the Department of Energy (DoE) subsequently indicated that it would pursue a staggered financial-close protocol, which would possibly begin this year, but continue into 2015. Engineering News Online has learned that the bidders have been requested to extend the validity of their bids to March.
The staggered closure framework was a departure from the previous two bidding rounds, when all power purchase agreements, direct agreements, implementation agreements and connection agreements were concluded on a single day by all bidders.
A total of 47 renewables projects were currently either producing electricity for sale into the Eskom grid, or remained under construction across the country. To date, the REIPPPP, held up internationally as a successful process, had stimulated about R120-billion in private investment into South Africa’s supply-stressed electricity sector.
However, it emerged earlier in the year that Eskom had serious grid constraints, which had become a major impediment to the connection of some of the round-three projects. The so-called “low handing fruit” had been absorbed by the initial projects and it had become both difficult and expensive to connect a number of the proposed projects.
For this reason, round-four renewables contenders, which submitted project bids on August 18, were unsurprised to learn of a delay to the preferred-bidder announcement.
South African Wind Energy Association CEO Johan van den Berg told Engineering News Online that he remained optimistic that the REIPPPP was broadly on track, despite the latest delays.
He said there was no clarity yet on when the third-round projects might close, nor on when the fourth-window preferred projects would be named. However, a “close relationship” had been forged between the industry and the Independent Power Producer Office, which comprised officials from the DoE and the National Treasury, as well as their financial, technical and legal advisers.
Van den Berg said that, while the industry had been unsettled by the delays, it remained confident the technical issues bedevilling progress could be overcome.
South African Photovoltaic Industry Association deputy chairperson Mike Levington concurred, saying that developers had adopted a “pragmatic” stance to the problems and were committed to finding ways to overcome them.
Levington said that, while nobody was happy with the delays, it was accepted that a more sustainable solution was required to deal with the gird-connection issue. Practical remedies were required that did not place additional financial stress on Eskom, but still made it viable for renewables projects to proceed.
Finding workable protocols would have implications for the schedule in the short term, but should yield a more robust framework for future projects.
There was also no announcement yet regarding the outcome of the Concentrated Solar Power-only bid window, for which bids were submitted on March 31, 2014.