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.

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
The South African government and Eskom have signed agreements with three of the 11 projects that were named as preferred bidders in March 2021 under the much-delayed RMIPPPP.

The 20-year power purchase agreements (PPAs) and associated implementation agreements were signed on June 2 with Scatec, of Norway, for three solar-battery hybrid projects that will provide 150 MW of dispatchable renewable electricity from 05:00 in the morning to 21:30 in the evening.

The three projects were not initially included among the eight preferred bidder projects selected in March 2021, but were added a few months later, increasing capacity being procured under the RMIPPPP to 1 995 MW.

Kenhardt 1, 2 and 3 will have a combined solar PV footprint of 540 MW and battery storage capacity of 225 MW/1 149 MWh.

The projects include a self-build component for the power line and substation infrastructure required ahead of connection to the Eskom grid.

The bid evaluation price announced at the time of project selection was about R188c/kWh.

The R16-billion investment will be funded through a combination of debt (80%) and equity (20%), and the projects have 60 days to achieve financial close before entering into an 18-month construction period.

Scatec estimates that 4 968 job opportunities will be created during the period.

The debt is being provided by Standard Bank, which is also the mandated lead arranger and underwriter, and British International Investment, while Scatec (51%) and H1 Holdings (49%), a black-owned and -managed company, are the equity partners.

Scatec CEO Terje Pilskog has described the signing as a landmark, adding that the hybrid projects were not only unique to South Africa but would also be among the biggest renewable-energy and storage projects globally.

Pilskog has also expressed confidence that construction would not be affected by supply chain disruptions, despite the bulk of the components being sourced from China.

Scatec and H1 Holdings have also stressed that all local-content obligations would be met.

Mineral Resources and Energy Minister Gwede Mantashe, who presided over the signing ceremony, indicated that he would like all 11 projects selected under the ‘emergency procurement round’ to reach financial close, including the controversial Karpowership projects.

He said the capacity was needed to reduce the ongoing risk of load-shedding, which he described as a “burning platform” for the country.

IPP Office CEO Bernard Magoro said that there had been ongoing engagements with the other bidders ahead of the latest RMIPPPP deadline, but that none of the other projects were in a position to sign.

He added that no decision had yet been taken to disqualify the outstanding projects, and that every effort would be made to ensure that they, too, achieved financial close.

The IPP Office added that, owing to the confidential nature of the contractual process, it could not provide information on the nature or status of preparation for individual bidders.

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.