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Africa|Construction|Energy|Eskom|Financial|Power|Projects|Renewable Energy|Renewable-Energy|Resources|Solar|supply-chain
Africa|Construction|Energy|Eskom|Financial|Power|Projects|Renewable Energy|Renewable-Energy|Resources|Solar|supply-chain
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Renewables rhythm

28th July 2023

By: Terence Creamer

Creamer Media Editor

     

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Once lauded as an international benchmark, South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has struggled to rediscover its rhythm after being disrupted for seven years by the then State-captured Eskom leadership.

Prior to 2015 and Eskom’s announcement that it was no longer prepared to enter into power purchase agreements with new renewable- energy projects on the dubious claim of having returned to a generation surplus, the programme had developed a positive momentum.

After two very expensive rounds, renewables tariffs were starting to reflect the steep fall in global solar and wind prices, and nascent domestic supply chains were beginning to develop, while social pledges and transformation were improving round by round.

The much-delayed Bid Window Four (BW4) projects, which fell victim to Eskom’s policy-defying intransigence, even became something of a symbol of President Cyril Ramaphosa’s 2018 ‘New Dawn’, when then Energy Minister Jeff Radebe shepherded them towards construction.

It turned out to be a false dawn, however. It took a further two years for BW5 to be launched, with renewables-sceptic Gwede Mantashe, who took over the merged Mineral Resources and Energy portfolio, taking some time to gazette the Integrated Resource Plan of 2019 on which any procurement would be based and months more to publish the Ministerial determinations needed for the initiation of actual procurement.

Despite the distraction of, and subsequent delays to, the poorly designed emergency procurement for 2 000 MW of mostly powership capacity, it then appeared that the REIPPPP’s rhythm was about to be re-established.

In October 2021, Mantashe named 25 wind and solar preferred bidders for projects with a combined capacity of 2 583 MW and record-low tariffs. As the full extent of the supply chain disruptions associated with China’s harsh Covid lockdowns came to the fore and Russia’s invasion of Ukraine amped up energy prices across the board, including renewables component prices, it soon became clear that the BW5 tariff were mostly too good to be true.

Only a handful of the 19 projects that eventually reached legal close have achieved financial close and it appears that there will be some major casualties as the final deadline for entering into construction looms.

The disappointment did not end there. After expanding the BW6 to procure 4 200 MW in light of intensifying loadshedding, only the solar projects with a combined capacity of 1 000 MW were eventually named as preferred bidders in 2022. This, after the 23 wind projects vying for the 3 200 MW allocation were crowded out by a combination of poor and overly conservative grid management.

The net result is that only the BW4 projects that were initially procured in 2014 have entered production despite South Africa being desperately short of the energy that these variable plants could have provided had there been both greater political will and better coordination.

While the REIPPPP is thankfully no longer the only renewables game in town, it is still vital that it rediscovers its rhythm when BW7 is launched in September.

Edited by Terence Creamer
Creamer Media Editor

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