DMRE confirms Eskom as buyer of renewable energy under REIPPPP Bid Window 5

25th September 2020 By: Marleny Arnoldi - Creamer Media Online Writer

DMRE confirms Eskom as buyer of renewable energy under REIPPPP Bid Window 5

Mineral Resources and Energy Minister Gwede Mantashe on September 25 gazetted a Section 34 Determination to procure energy from independent power producers (IPPs).

This paves the way for Bid Window 5 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

The gazette confirms that IPPs will sell the power to State-owned power utility Eskom, while the Department of Mineral Resources and Energy will be the procurer, with duties that include negotiating power purchase agreements.

The latest determination by Mantashe opens the way for the procurement of 11 813 MW of new generation capacity, of which 6 800 MW has been specified for solar or wind power, 513 MW for storage, 3 000 MW for gas and 1 500 MW for coal.

The National Energy Regulator of South Africa (Nersa) previously stated that some stakeholders had raised concerns about Eskom being the buyer of the power, since the entity is in a weak financial position, while other stakeholders had outlined several preconditions for retaining Eskom as the buyer, including the need for National Treasury guarantees and a commitment from the utility that generators would be connected to the grid.

Nersa said Eskom should remain the buyer of the power, stating that the upcoming changes in the electricity sector, including the unbundling of Eskom and amendments to the New Generation Regulations, would be important considerations when determining the decision on who the buyer should be in future.

The DMRE had told Engineering News & Mining Weekly on September 14 that it was planning to release bid documentation for Bid Window 5 no later than the end of December.

Western Cape Finance and Economic Opportunities Minister David Maynier commented in a September 25 statement that the gazetting of the Section 34 Ministerial Determination was a "welcome step towards energy resilience".

"We noted that the gazette indicates that the procurement programmes shall target connection to the grid for the new generation capacity as soon as reasonably possible. This is important as the Risk Mitigation Independent Power Producer Procurement Programme of 2 000 MW is unlikely to sufficiently bridge the supply gap due to ongoing constraints experienced by Eskom, both in maintenance and decommissioning," he noted.

Maynier further pointed out that the determination allows for deviations from the timetable set out in the Integrated Resource Plan 2019.

"Given the Council for Scientific and Industrial Research projections of a significant capacity gap and that renewable energy and gas construction lead times are relatively short, these technologies offer the quickest path to mitigating losses to the economy due to load-shedding and should, therefore, be prioritised," he noted.

He added that Bid Window 5 and subsequent bid windows would provide a pipeline of projects that would support the development of a local supply chain, support green infrastructure and industrialisation and contribute to energy security, job creation and economic growth.