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, which is 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:

1. the 150 MW ACWA Power Project DAO – a hybrid facility comprising solar photovoltaic (PV) and a battery energy storage system (BESS);
2. a 450 MW Karpowership SA Coega facility – a gas-to-power plant based on imported liquefied natural gas (LNG);
3. the 450 MW Karpowership SA Richards Bay facility – a gas-to-power plant based on imported LNG;
4. a 320 MW Karpowership SA Saldanha facility – a gas-to-power plant based on imported LNG;
5. the 198 MW Mulilo Total Coega facility – a hybrid plant employing solar PV and imported LNG;
6. the 75 MW Mulilo Total hydra storage project – a hybrid facility comprising solar PV and a BESS;
7. the 128 MW Oya Energy hybrid facility – a hybrid facility comprising solar PV, wind and a BESS; and
8. the 75 MW Umoyilanga Energy – a hybrid facility comprising solar PV, wind and a BESS.

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

The Scatec projects will comprise three hybrid plants with solar PV technology and BESSs, in the Northern Cape.

To meet the dispatchable profile demanded under the RMIPPPP, the three projects – Kenhardt 1, Kenhardt 2 and Kenhardt 3 – will together produce 540 MW solar and 225 MW/1 140 MWh battery storage, based on sites in the Northern Cape.

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
Not stated.

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

Planned Start/End Date
The projects are expected to reach financial close by no later than the end of July 2021 and be connected to the grid from August 2022.

The Scatec projects are required to achieve financial close by the end of September 2021, with grid connection by the end of 2022.

Latest Developments
Shell South Africa country chairperson Hloniphizwe Mtolo has confirmed that the energy group is the exclusive supplier of LNG to Karpowership SA.

Mtolo has said in a statement that the three projects will assist the country in addressing its prevailing electricity shortfall and that Shell is “extremely concerned” about delays to the RMIPPPP. Mtolo contends that the projects have the potential to eliminate an entire stage of load-shedding.

In late June, the Department of Forestry, Fisheries and the Environment (DFFE) announced its refusal to provide Karpowership SA with environmental authorisation for its three projects.

The DFFE said the Competent Authority in the department adjudicated the applications in terms of the National Environmental Management Act (NEMA) and specific sections of the Environmental Impact Assessment regulations, and concluded that Karpowership SA had failed to comply with the prescribed NEMA requirements pertaining to public consultation.

In addition, the actual and potential impacts on the environment, as well as socioeconomic impacts, particularly on small-scale fisheries, could not be fully evaluated, owing to an absence of proper underwater noise impact studies.

Despite various appeals against the decision, including those launched by business chambers in the Eastern Cape and Western Cape, the refusal has placed the future of the projects in doubt, as the 20-year RMIPPPP projects are meant to reach financial close by the end of July or face disqualification.

Shell has emphasised its commitment to a global net-zero carbon target by 2050; nevertheless, it says gas has a critical role to play in South Africa’s just energy transition and is aligned with South Africa’s decarbonisation goals.

Natural gas, Mtolo has argued, pairs well with renewables and represents a lower-carbon solution for customers in sectors that are difficult to decarbonise, such as in the mining, construction, iron and steel industries.

Meanwhile, opposition to Karpowership SA remains fierce, with critics questioning not only the design of the RMIPPPP but also the exemptions the projects received from local-content rules and their potential to sterilise valuable port real estate for a period of 20 years.

The duration of the power purchase agreements has also been criticised, with power ships typically meant to be deployed to address power emergencies over a short period, rather than to provide long-term electricity.

In addition, losing-bidder DNG Energy has alleged corruption in the awarding of preferred bidders status to Karpowership SA and has approached the courts.

In a recent article, EE Business Intelligence MD Chris Yelland wrote that, even if the internal appeal by Karpowership to the DFFE succeeds in reversing the decision, further legal proceedings could be launched by environmental groups to prevent the projects from proceeding.

Yelland has also argued that the other eight projects, which complete the balance of 780 MW of dispatchable generation capacity to be procured under the RMIPPPP, were also likely to struggle to meet the end-of-July deadline. This is largely owing to their difficulties in meeting the local-content designation for solar PV panels stipulated in the RMIPPPP bid documents. 

Key Contracts, Suppliers and Consultants
None stated.

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