Minister Gwede Mantashe announced the initial end-July commercial-close deadline on March 18
Photo by: Creamer Media Chief Photographer Donna Slater
The deadline for projects selected as preferred bids under the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) to reach commercial close has been extended to September 30, from an initial deadline of the end of July.
However, the Department of Mineral Resources and Energy (DMRE) insists that the decision will not delay its other procurement programmes, which are either under way or scheduled for launch later this year.
The DMRE confirmed the RMIPPPP delay in a response to questions posed by Engineering News & Mining Weekly and reported that the decision had been communicated to the preferred bidders on July 29.
The projects, which were identified as preferred bids by Mineral Resources and Energy Minister Gwede Mantashe on March 18, were expected to reach financial close by no later than the end of July and be connected to the grid from August 2022.
The “emergency procurement” programme was launched in an effort to close an immediate supply deficit, believed to be larger than 5 000 MW, which has made the South Africa electricity system prone to disruption.
A new Council for Scientific and Industrial Research analysis shows that Eskom resorted to 650 hours of load-shedding during the first six months of 2021, shedding 963 GWh of energy during the period, with every month, from January to the end of June, affected.
Eight projects, including three gas-to-power Karpowership projects that secured the lion’s share, or 1 220 MW, of the 2 000 MW allocation made during the so-called ‘technology agnostic’ RMIPPPP procurement round, were initially named by Mantashe. Three additional solar/battery storage projects were then confirmed as preferred bids in June, following “value for money” discussions.
Besides the floating gas-to-power plants, the other projects comprise a combination of renewable-energy generators, battery energy storage and some also include gas.
The DMRE told Engineering News & Mining Weekly that the deadline had been extended to allow for the “finalisation of the regulatory processes, including Eskom board approvals and related Public Finance Management Act approvals”.
However, the extension also follows a refusal by the Department of Forestry, Fisheries and the Environment (DFFE) to provide Karpowership SA with the environmental authorisations required for its projects, which are proposed for development at the ports of Richards Bay, Ngqura and Saldanha Bay.
On June 24, the DFFE announced that the Competent Authority in the department had found that the applications had failed to comply with the National Environmental Management Act and specific sections of the Environmental Impact Assessment regulations.
Karpowership SA, as well as various business formations, have since appealed the decision.
The award is also the subject of a court case brought by DNG Energy, a losing RMIPPPP bidder, which alleges corruption in the awarding of preferred bidders status to Karpowership SA.
The DMRE stressed that the extension applied to all preferred bidders and refused to comment on the status of the Karpowership SA projects specifically, saying that “any queries regarding the progress of any particular bidder should be directed at the relevant project company”.
In response to a question on whether the solar-linked projects would be able to meet the local-content thresholds set in the RMIPPPP, the DMRE said: “Following engagements between preferred bidders and the Department of Trade, Industry and Competition (DTIC), the DTIC has granted partial exemption to preferred bidders to source 35% of the solar photovoltaic (PV) panels required for their projects locally from the local suppliers.”
The department was also not anticipating any legal action from those solar-linked projects whose bids were disqualified for not being able to meet the designations, stressing that the “local content exemptions are regulated by the DTIC”.
The extension of the commercial close date for the RMIPPPP would also have no impact on the roll-out of the other procurement programmes outlined in the “Second Ministerial Determination”.
The fifth bid window of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is currently open, with the bid closing date set for August 16.
Government is aiming to procure 1 600 MW of onshore wind and 1 000 MW of solar PV through the bidding round, which is also meant to represent the start of regular procurement rounds for additional renewables, as well as gas-to-power, coal and gas.
The sixth REIPPPP bid window for a further 2 600 MW of wind and solar PV capacity is expected to be opened in August or September, as is the procurement of 513 MW of battery energy storage.
It has also been indicated that bidding for 3 000 MW of gas-to-power and 1 500 MW of new coal could be launched in December, this despite growing decarbonisation pressures and questions over whether new coal can be financed.