DBSA to support participation of black firms, communities in bid windows for renewables, batteries and gas

22nd January 2024 By: Terence Creamer - Creamer Media Editor

DBSA to support participation of black firms, communities in bid windows for renewables, batteries and gas

State-owned development financier the Development Bank of Southern Africa (DBSA) is gearing up to play a role in the public procurement of 7 615 MW of new electricity generation and storage capacity, including by facilitating participation for black-owned entities and communities.

The DBSA has, to date, invested R12.4-billion into various projects procured since the launch of the country’s first independent power producer (IPP) auctions in 2011 and will now seek to participate in the three bidding rounds launched in December for 5 000 MW of renewable energy, 2 000 MW of gas to power (GtP) and 615 MW/2 460 MWh of battery storage.

Head of energy, environment, and information and communications technology Mathapelo Malao said the DBSA stood ready to continue to provide infrastructure financing to IPPs and broad-based black economic empowerment (BBBEE) investors and to use the inaugural bid window for GtP to improve its pipeline for gas finance.

Malao describes enabling BBBEE and local community trusts as crucial to its mandate to support the transformation of the economy and the just energy transition.

Besides the three procurement rounds currently under way, the IPP Office is preparing another set of requests for proposal for a further 5 000 MW of renewable energy, 616 MW of battery storage and 1 000 MW of GtP, which could be launched before the end of March.

The second GtP procurement round will be reserved for projects in the Coega Special Economic Zone in the Eastern Cape.

The three programmes currently in the market have been launched following a disappointing recent performance of public procurement, despite a considerable supply/demand gap and intensifying loadshedding.

Particular attention will be given in the coming months to how both government and the bidders adjust to the grid constraints that emerged during the sixth bid window of the renewables programme, when none of the wind projects advanced to preferred-bidder stage after Eskom indicated that the grid capacity on which those projects were bid had been absorbed by projects premised on private power purchase agreements.

While it was initially anticipated that some capacity in the Eastern, Northern and Western Cape provinces might be released under a revised curtailment framework the current seventh bid window has not catered for such a revision.

However, there has been a liberalisation of the prevailing curtailment system to allow projects to receive compensation at the first curtailment event, rather than when a 5% curtailment threshold is breached.

The grid constraints appear to have also affected the inaugural GtP bid window, with a 1 000 MW cap being placed on the amount of capacity that can be built in proximity to the Port of Richards Bay, which has been earmarked as a future gas hub and where a preferred bidder was recently selected for the development of a liquefied natural gas terminal.

The maximisation of the existing grid has also emerged as a key criterion for the positioning of new battery storage, with eight substation sites having been selected in the North West province for the second bid window.

During the first, all five selected sites were in the grid-constrained Northern Cape.