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Risk Mitigation Independent Power Producer Procurement Programme, South Africa – update

Image of solar panels and battery energy storage

15th December 2023

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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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) – in the Northern Cape;
  • the 450 MW Karpowership SA Richards Bay facility – a gas-to-power plant, based on imported LNG – in the Northern Cape;
  • a 320 MW Karpowership SA Saldanha facility – a gas-to-power plant, based on imported LNG – in the Northern Cape;
  • 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, in the Northern Cape; and
  • the 75 MW Umoyilanga Energy – a hybrid facility comprising solar PV, wind and a BESS, Northern and Eastern Cape.

Umoyilanga Energy will operate as a virtual power plant, combining generation from two sites that are 900 km apart. Avondale, in the Northern Cape, will include 115 MW of solar PV and 30 MW of battery storage, while Dassiesridge, in the Eastern Cape, will incorporate 63 MW of wind and 45 MW of battery storage.

To meet its 75 MW dispatchable profile, Dassiesridge will charge batteries from the wind energy at night and discharge power in the morning until the sun rises. The solar installation at Avondale will supply the bulk of the energy during the day, supplemented by wind energy from Dassiesridge. Excess solar energy will be used to charge the batteries at Avondale, which will discharge after sunset.

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

To meet the dispatchable profile demanded under the RMIPPPP, the three projects – Kenhardt 1, Kenhardt 2 and Kenhardt 3 – will together produce 540 MW of 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
The Oya Energy hybrid facility and Umoyilanga Energy will contribute 3 966 job-year opportunities in the construction and operation of these power plants.

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

The Oya Energy hybrid facility and Umoyilanga Energy projects have a combined investment value of R14.6-billion.

Planned Start/End Date
The Oya Energy hybrid facility and Umoyilanga Energy projects are expected to be online from 2025 onwards.

Umoyilanga  Energy achieved financial close in November 2023, with construction starting immediately.  Commercial operations are expected in May 2025.

Latest Developments
A signing ceremony for the legal close of the 75 MW Mulilo Total Hydra Storage project was conducted on November 30.

The project is being developed by the TotalEnergies Hydra Storage Consortium comprising TotalEnergies Renewables Southern Africa, Hydra Holdco and Reatile Renewables.

The hybrid solar photovoltaic/BESS project is proposed for construction in De Aar, in the Northern Cape, and will provide dispatchable renewable electricity daily between 05:00 and 21:30.

The project is expected to reach commercial close by mid-December 2023, and will start the 24-month construction phase in early 2024.

The new generation capacity is expected to be online from early 2026.

The Mulilo Total Hydra Storage project is the sixth of an initial 11 RMIPPPP projects to reach commercial close, with the first two of Scatec’s three projects under the programme – Kenhardt 1, 2 and – already in operation.

The EDF Renewables-led Umoyilanga hybrid project, meanwhile, reached financial close on November 28, and has entered construction, while the Oya hybrid project, being developed by ENGIE and G7 Renewables Energies, is said to be advancing towards financial close.

A firm end-of-December deadline has been set for the commercial close of all RMIPPPP projects, which have been locking up scarce grid-connection capacity for over two years.

Besides several hybrid projects that were named as preferred bidders following the launch of the RMIPPPP, the lion’s share of the capacity under the controversial tender has been allocated across three floating gas-to-power projects bid by Karpowership.

These projects have faced legal and environmental opposition, but environmental-impact assessment (EIA) approvals were recently provided to Karpowership for proposed project sites in Richards Bay, in KwaZulu-Natal,  and Saldanha Bay, in the Western Cape.

Key Contracts, Suppliers and Consultants
Scatec (Kenhardt 1, Kenhardt 2 and Kenhardt 3); G7 Renewable Energies, ENGIE, Meadows Oya Energy and Perpetua RMI4P (Oya Energy hybrid facility); and EDF Renewables and Perpetua Holdings (Umoyilanga Energy).

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

Edited by Creamer Media Reporter

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