There are signs that the South African government is, at last, gearing up to procure electricity capacity from independent power producers (IPPs) besides that which is already being acquired from renewable-energy IPPs.
A tender has been published for the appointment of transaction advisers, as well as programme and project managers for the “design, development and implementation” of an IPP procurement programme for baseload and mid-merit projects.
The invitation seeks bids from service providers and has been issued by the Development Bank of Southern Africa (DBSA), which has been mandated by the Department of Energy (DoE) and the National Treasury to oversee the tender.
Any procurement processes arising will be conducted in line with determinations issued by then Energy Minister Dipuo Peters on December 19, 2012. These outlined plans for the procurement of new generation capacity from coal, gas, industrial cogeneration facilities and hydropower plants. They also indicated that some hydropower and coal capacity could be imported from the region.
The determinations included IPP baseload allocations and allocations arising from the Medium-Term Risk Mitigation (MTRM) plan – both of which have been catered for under the current version of the Integrated Resource Plan, which is in the process of being revised.
Under the MTRM determination, the DoE is seeking to procure 800 MW of near-term cogeneration capacity, which could arise from biomass, industrial waste and combined heat and power sources. It is also aiming to secure 474 MW from natural gas projects.
Under the baseload determination, 2 500 MW has been allocated to coal-fired IPP projects, 2 652 MW to baseload or mid-merit natural gas capacity and 2 609 MW to domestic and imported hydro-electricity prospects.
The IPP capacity would need to be introduced into the South African electricity system by March 2019, which would be in advance of any new Eskom capacity to follow the introduction of the Medupi, Kusile and Ingula power projects that are meant to be completed by 2018.
Trade and Industry Minister Dr Rob Davies announced last week that Cabinet had decided to endorse another large-scale coal-fired power station project, currently dubbed ‘Coal 3’, the construction of which would follow the conclusion of the Medupi and Kusile projects. However, few details have been released.
In its tender advertisement, the DBSA indicated that it was seeking service providers with the following competences:
- Experience in public–private partnerships and the procurement of IPPs
- Experience in cross-border transacting.
- Insight into international IPP best practice across the various technology platforms.
- Technical knowledge in the procurement and structuring of power projects.
- Project and contract management skills.
- Expertise in financial analysis.
- Experience in regulatory and legal analysis, the drafting of legal agreements and the negotiation of bankable IPPs.
- And competence in environmental, social development and black economic-empowerments delivery.
The DBSA indicated that firms and individuals could choose to bid for all or parts of the components outlined in the tender. The closing date for submissions is 12:00 on September 20.
Meanwhile, the DoE has also formally invited bids for the finance, construction, operation, and maintenance of small-scale renewable-energy generation facilities, ranging in size from 1 MW to 5 MW.
In total, the DoE is aiming to procure 100 MW from developers of onshore wind, solar photovoltaic, biomass, biogas or landfill gas technologies.
This capacity would form part of the move by government to secure an initial 3 725 MW of renewables capacity, with 3 625 MW arising from larger-scale developments.
To date, 2 460 MW has already been allocated across 47 renewables projects, and the third bid window for the remaining 1 165 MW closed on August 19, with preferred bidders to be named on October 29.
The DoE indicated that those interested in participating in the small-scale renewables process and accessing the request for proposals documentation would need to complete a registration form and pay a nonrefundable fee of R5 000.