Bid Window 5 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is a key milestone along South Africa’s energy path and confirms government’s commitment to address power generation shortages in the country, says independent power producer (IPP) Globeleq chief development officer Jonathan Hoffman.

“This was an important and necessary signal to the local wind energy sector, which needs predictability and a steady flow of procurement over the coming years to justify the investment in new capacity. This is also important for international suppliers, who have to prioritise certain countries,” explains Hoffman.

He states that over the past ten years, the REIPPPP has developed a “reputation as a transparent, credible and bankable process” that has allowed South Africa to procure several gigawatts of wind generation capacity at very competitive prices.

This success would not have been possible without several contributing factors, he argues.

These factors include a balanced risk allocation between IPPs, lenders, State-owned power utility Eskom and government; robust documentation; stable regulatory framework, and government support to Eskom.

“The South African government has recognised that a rolling procurement programme will support localisation and capitalise on the country’s potential as a renewables hub for Africa. Local bodies, the IPP Office (IPPO), the National Energy Regulator of South Africa and Eskom’s Single Buyer Office have demonstrated a strong institutional framework to manage IPPs, and we are positive that government will manage Eskom’s restructuring in a manner that will ensure bankability and encourage confidence from international players.”

He contends that, in future bidding rounds, certain aspects can be improved.

This includes more regular implementation of the bidding windows – to avoid a “boom-and-bust” approach that is unsuitable to the localisation of the wind industry – and continued investment in grid infrastructure to ensure that more wind energy projects can be deployed.

Hoffman asserts that Globeleq, with its consortium partners, has committed substantial resources, capital and effort to Bid Window 5, which includes bids for six large wind energy projects across South Africa.

Globeleq has extensive experience in the country, having invested over R6-billion in three renewable energy projects since the first REIPPPP round in 2011.

Since then, the company has continued to expand, and currently owns and operates ten wind and solar photovoltaic plants across Africa that total over 500 MW.

He confirms that Globeleq has asset management and operations and maintenance (O&M) capabilities, and the company expects to leverage on this experience to continue developing, investing and operating wind energy projects in South Africa and across the continent.

“Globeleq continues to support the localisation of the wind industry by maximising local procurement, in line with the guidelines of the REIPPPP, although this can come with quality and cost challenges. The company also employs over 100 people in the country – most of whom are South African – and strongly supports skills development and transfer.”

In addition to providing employment opportunities, Globeleq during the last ten years has sponsored over 260 scholarships, focusing on mechatronic and electrical engineering studies to support students from disadvantaged backgrounds.

The company has also offered over 70 interns their first job, with eight interns recruited into permanent roles with Globeleq.

“Globeleq continues to develop wind energy projects across Africa, often in partnership with local developers and national utilities, using the latest available technology and best international practice.

“In terms of operational projects, our flagship project in South Africa is the 138 MW Jefferey’s Bay Wind Farm, in the Eastern Cape.”

Jeffreys Bay Wind Farm

Hoffman confirmed that Globeleq and financial services firm Absa, leading a group of lenders, in August this year successfully completed a debt refinancing process for three of Globeleq’s renewable-energy plants in South Africa, one of which is the Jeffrey’s Bay Wind Farm.

This was done in cooperation with the IPPO.

“This refinancing enabled us to release significant capital available for new investments and reduce the tariff, providing savings to Eskom over the remaining power purchase agreement (PPA) term for the Jeffrey’s Bay Wind Farm.”

Globeleq signed a 20-year PPA with Eskom for the project, which is expected to remain operational for the long term.

The project is one of the largest wind farms in Africa and was among the first utility-scale wind projects to be built in South Africa under the REIPPPP. It achieved financial close in November 2012 and commercial operation in May 2014, on time and within budget.

Globeleq is the majority owner and operator of the project, which was codeveloped with partners renewable energy companies Mainstream and Genesis Eco-Energy. Globeleq also provides the O&M services for the balance of the plant, whereas the original-equipment supplier Siemens Gamesa provides the O&M services for the wind turbines.

“The project has an excellent reputation in the industry and is an example, across Africa, of what can be achieved through a well-structured partnership between government, the national power utility and the private sector. Alongside our partners, we hope to win a few more projects in Bid Window 5 and plan to continue investing in the sector in the long term, including preparations for future bid windows and generation to large offtakers,” he concludes.