The South African government has received an extremely strong response to a recently released request for information (RFI) for the development, or importation, of conventional power generation capacity.
Department of Energy (DoE) director-general Nelisiwe Magubane confirmed on Thursday that potential developers of cogeneration facilities, as well as coal-fired power stations, natural gas facilities and imported hydropower projects indicated that 60 300 MW of capacity could be introduced into the country’s stressed power system before March 2019.
The responses were submitted to the DoE and the National Treasury on March 26 and evaluation work was still required before government could make a decision on whether an independent power producer (IPP) procurement programme would be worth pursuing.
But the scale of the response was “exciting” and could result in the issuance of a request for proposals (RFP) by year-end. A similar RFI was issued in October 2010 for renewable energy projects and the information was later used by the DoE and the National Treasury to inform the framework adopted for the renewable energy IPP programme, under which government was in the process of procuring an initial 3 725 MW of capacity.
But Magubane also confirmed that many of the projects proposed were located outside the borders of South Africa, including imported hydropower and gas. Therefore, government would have to balance the opportunities presented with its stated energy-security strategy of not importing more than the country’s ideal reserve margin of above 15%.
The RFI was intended to generate information to assess the projects of potential developers, as well as the readiness of the market to enter into intensive procurement and fast-track negotiation processes.
At this stage, a decision on how government might proceed was expected during May and transaction advisers should be appointed by June. These advisers would have until September to prepare the RFP documentation, which would then be released into the market.