The Department of Mineral Resources and Energy (DMRE) has announced the appointment of three additional preferred bidder projects under the 2 000-MW Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), following the completion of “value for money negotiations” with Norwegian renewables power producer Scatec.
On March 18, Mineral Resources and Energy Minister Gwede Mantashe named eight preferred bidders following a bidding round that sought solutions that could supply dispatchable power from 5:00 in the morning to 21:30 at night for a 20-year period.
Controversially, the bulk of the capacity (1 220 MW) was allocated to three power ship projects, which are currently the subject of a court challenge by losing bidder DNG Energy, as well as a complaint by environmental campaigners Green Connection.
Green Connection claims that the power ship environmental impact assessment for Saldanha Bay, in the Western Cape, is deficient as no specialist study was conducted into the potential consequences or impacts on the environment and marine resources as a result of underwater noise generated by the ships.
Government has dismissed the DNG Energy case as having “no merit” and the Green Connection letter of complaint was delivered to the Department of Forestry, Fisheries and the Environment only on May 30.
Separately, energy expert Clyde Mallinson has written to the Department of Public Works and Infrastructure and the Independent Power Producer Office to highlight the techno-economic shortcomings of the RMIPPPP, which he argues should be replaced by a materially larger, yet more cost-effective, procurement programme based primarily on renewables and storage, rather than power ships.
The Scatec projects, meanwhile, total 150 MW of contracted capacity, divided between three 50 MW hybrid plants in the Northern Cape, comprising solar photovoltaic (PV) technology and battery energy storage.
The projects will involve capital expenditure of $1-billion.
To meet the dispatchable profile demanded under the RMIPPPP, the three projects – dubbed Kenhardt 1, Kenhardt 2 and Kenhardt 3 – will incorporate 540 MW of solar PV and 225 MW/1 140 MWh of battery storage.
Scatec noted that the projects were the only ones selected under the RMIPPPP that relied exclusively on renewable energy, arguably making the three-project portfolio one of the largest single site solar-storage hybrids in the world.
The other renewables-linked projects selected under the RMIPPPP included some gas-to-power capacity to complement the variability of the wind or solar PV capacity and to reduce the size and cost of the battery storage solution to be deployed.
The DMRE reported that the evaluation prices for Kenhardt 1, Kenhardt 2 and Kenhardt 3 were R1 884.64/MWh, R1 884.61/MWh and R1 884.56/MWh respectively.
The evaluation prices for the other renewables-link projects named have been provided as being: R1 462/MWh (150 MW ACWA Power DAO project); R1 550.34/MWh (128 MW Oya Energy Hybrid Facility); R1 721.64/MWh (75 MW Umoyilanga Energy); R1 885.37/MWh (197.76 MW Mulilo Total Coega); and R1 515.97/MWh (Mulilo Total Hydra Storage).
The evaluation price for the Karpowership project at Coega, in the Eastern Cape, was the second lowest bid under the RMIPPPP at R1 468.87/MWh, with the evaluation prices for Richards Bay and Saldanha Bay reported at R1 496.03/MWh and R1 686.48/MWh respectively.
Scatec, which is listed on the Oslo Stock Exchange, said financing had been sourced, with the $1-billion to be funded by project finance debt from a consortium of commercial banks and development finance institutions at an expected debt leverage of 80%.
Scatec would own 51% of the equity in the projects with black-owned H1 Holdings owning the 49% balance.
Scatec would also be the engineering, procurement and construction provider and deliver operation and maintenance as well as asset management services to the power plants.
The DMRE said the projects were required to achieve financial close by the end of September 2021, with grid connection by the end of 2022.
Scatec CEO Raymond Carlsen described the announcement as a great milestone for the company, which had previously completed six solar plants under South Africa’s renewables procurement programme, which resumed again in April following a seven-year disruption.
“We are demonstrating that cost competitive dispatchable solar power can be delivered at large scale with short implementation time,” Carlsen said in a statement, adding that Scatec was looking forward to further building on its South Africa portfolio.