Name of the Project
Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).

Location
South Africa.

Project Owner/s
Department of Mineral Resources and Energy (DMRE).

Project Description
The RMIPPPP, also known as the ‘emergency’ procurement round, is a response to the short-term electricity supply gap identified in the Integrated Resource Plan 2019.

The objective of the RMIPPPP is to not only alleviate the current electricity supply constraints but also reduce the use of diesel-based peaking electrical generators.

The programme aims to procure 2 000 MW from a range of energy sources and technologies.

The DMRE issued a request for proposal for the RMIPPPP in August 2020.

Mineral Resources and Energy Minister Gwede Mantashe released the names of the eight preferred bidders on March 18, 2021:

• the 150 MW ACWA Power Project DAO – a hybrid facility comprising solar photovoltaic (PV) and a battery energy storage system (BESS);
• a 450 MW Karpowership SA Coega facility – a gas-to-power plant based on imported liquefied natural gas (LNG);
• the 450 MW Karpowership SA Richards Bay facility – a gas-to-power plant based on imported LNG;
• a 320 MW Karpowership SA Saldanha facility – a gas-to-power plant based on imported LNG;
• the 198 MW Mulilo Total Coega facility – a hybrid plant employing solar PV and imported LNG;
• the 75 MW Mulilo Total hydra storage project – a hybrid facility comprising solar PV and a BESS;
• the 128 MW Oya Energy hybrid facility – a hybrid facility comprising solar PV, wind and a BESS; and
• the 75 MW Umoyilanga Energy – a hybrid facility comprising solar PV, wind and a BESS.

In June 2021, the DMRE announced the appointment of three additional preferred bidder projects following the completion of “value for money” negotiations with Norwegian renewables power producer Scatec.

The Scatec projects will comprise three hybrid plants with solar PV technology and BESSs, in the Northern Cape.

To meet the dispatchable profile demanded under the RMIPPPP, the three projects – Kenhardt 1, Kenhardt 2 and Kenhardt 3 – will together produce 540 MW solar and 225 MW/1 140 MWh battery storage, based on sites in the Northern Cape.

Scatec has indicated that the projects are the only ones selected under the RMIPPPP that rely exclusively on renewable energy, making the three-project portfolio arguably one of the biggest single-site solar-storage hybrids in the world.

The projects will include average local content of 50% during construction, South African entity participation of 51% and black ownership of 41%.

Potential Job Creation
Not stated.

Capital Expenditure
The combined investment value of the initial eight projects is estimated at R45-billion.

Planned Start/End Date
The initial eight projects were expected to reach financial close by no later than the end of July 2021 and be connected to the grid from August 2022.

Latest Developments
Civil society organisation the Organisation Undoing Tax Abuse (Outa) has filed a review application in the North Gauteng High Court to have the decision by the National Energy Regulator of South Africa (Nersa) to grant floating gas powership company Karpowership-linked independent power producers (IPPs) generation licences set aside.

The application seeks the granting of the licences to be reviewed and set aside, as well as a court order for Nersa to reconsider and review the applications.

Nersa has stated in a media release that it has yet to receive the court application, but would study it and advise whether it would oppose the application once it has been received.

Outa's affidavit states that Nersa's decision-making is procedurally unfair. "The process was premature and lacking in transparency, with significant portions of the licence applications redacted," Outa has said.

Outa CEO Wayne Duvenhage has said that the regulator did not have the necessary information on issues, such as ports authorisations, environmental authorisations, as well as gas pipeline and storage licences, to reach a correct decision, and did the public did not either as the process proceeded.

Outa has further argued that Nersa's lack of transparency on the financial information raises concern about the effect on the public.

Nersa has also failed to take value-for-money considerations into account, including consideration of more cost-effective options, according to Outa's affidavit.

"There are faster and substantially cheaper generation project options available to eliminate load-shedding in the short-term, so the Karpowership projects are not needed," Outa advocate Stefanie Fick has said.

Outa believes that high-capacity factor gas power, as proposed by Karpowership, will mostly not displace carbon dioxide-emitting coal-fired power generation as claimed by Nersa in its reasons for decision, but will rather displace the amount of future renewable energy that will be built.

"Nersa failed to consider the climate impact of 20-year generation licences for the Karpowership IPPs, which run on fossil fuels, when cleaner, cheaper and faster electricity supply options are available.

"It will, thus, result in a higher emitting power sector than what would otherwise have been the case, and undermine the country’s efforts to decarbonise its economy,” Fick has argued.

Further, Outa states that the Karpowership projects will impose unnecessary financial, economic and environmental costs on South Africa and that the 20-year contracts carry a "significantly greater risk" to customers, the public and the economy than the available alternatives.

The Karpowership bid price in April 2020 was about R1.50/kWh, and Nersa said this would have increased to R2.80/kWh from April 2022.

However, an independent consultant estimates the current price is close to R5/kWh, which is about two to three times the cost of alternative generation methods, Outa has stated.

"The pricing methodology is such that the Karpowership IPPs could receive 'windfall' profits," Fick has stated.

“Nersa appeared to prioritise the interests of the Karpowership IPPs over the public. It is of great concern that Nersa, a South Africa public body using public funding, expresses concern about the financial affairs of a private Turkish majority-owned company, thereby creating the distinct impression that the financial well-being of Karpowership should enjoy preference above that of the South African public,” Fick has added.

Key Contracts, Suppliers and Consultants
None stated.

Contact Details for Project Information
DMRE, Natie Shabangu, email natie.shabangu@dmre.gov.za; or Thandiwe Maimane, email thandiwe.maimane@dmre.gov.za.