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 not only to 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:
- the 150 MW ACWA Power Project DAO – a hybrid facility comprising solar photovoltaic (PV) and a battery energy storage system (BESS);
- a 450 MW Karpowership SA Coega facility – a gas-to-power plant based on imported liquefied natural gas (LNG);
- the 450 MW Karpowership SA Richards Bay facility – a gas-to-power plant based on imported LNG;
- a 320 MW Karpowership SA Saldanha facility – a gas-to-power plant based on imported LNG;
- the 198 MW Mulilo Total Coega facility – a hybrid plant employing solar PV and imported LNG;
- the 75 MW Mulilo Total Hydra Storage project – a hybrid facility comprising solar PV and a BESS;
- the 128 MW Oya Energy Hybrid Facility – a hybrid facility comprising solar PV, wind and a BESS; and
- the 75 MW Umoyilanga Energy – a hybrid facility comprising solar PV, wind and a BESS.
Eligible bids, with a combined capacity of 150 MW, could still be awarded under the RMIPPPP at a later stage, subject to a value-for-money reassessment.
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.
Latest Developments
The DMRE has announced the appointment of three additional preferred bidder projects under the RMIPPPP, following the completion of “value for money negotiations” with Norwegian renewables power producer Scatec.
On March 18, 2021, Mineral Resources and Energy Minister Gwede Mantashe named eight preferred bidders, following a bidding round that sought solutions that could supply dispatchable power from 05:00 to 21:30 for a 20-year period.
The bulk of the capacity (1 220 MW) was allocated to three power ship projects, which are currently the subject of a court challenge by losing bidder DNG Energy, as well as a complaint by environmental campaigners Green Connection.
The Scatec projects, meanwhile, will comprise three hybrid plants in the Northern Cape, comprising solar PV technology and BESSs.
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 involve capital expenditure of $1-billion and will be funded by project finance debt from a consortium of commercial banks and development finance institutions at an expected debt leverage of 80%.
The DMRE has reported that the evaluation prices for Kenhardt 1, Kenhardt 2 and Kenhardt 3 are R1 884.64/MWh, R1 884.61/MWh and R1 884.56/MWh respectively.
Scatec will own 51% of the equity in the projects, with black-owned H1 Holdings owning 49%.
In addition to being the engineering, procurement and construction provider, Scatec will also deliver operation and maintenance, as well as asset management services, to the power plants.
The projects are required to achieve financial close by the end of September 2021, with grid connection by the end of 2022.
The other renewables-linked projects selected under the RMIPPPP include gas-to-power capacity to complement the variability of the wind or solar PV capacity, and to reduce the size and cost of the BESS solution to be deployed.
The evaluation prices for these projects have been provided: R1 462/MWh (150 MW ACWA Power DAO project), R1 550.34/MWh (128 MW Oya Energy Hybrid Facility), R1 721.64/MWh (75 MW Umoyilanga Energy), R1 885.37/MWh (197.76 MW Mulilo Total Coega) and R1 515.97/MWh (Mulilo Total Hydra Storage).
The evaluation price for the Karpowership project at Coega, in the Eastern Cape, is the second-lowest bid under the RMIPPPP, at R1 468.87/MWh, with the evaluation prices for Richards Bay and Saldanha Bay reported at R1 496.03/MWh and R1 686.48/MWh respectively.
Meanwhile, wholly women-owned energy company Meadows Energy has been announced as G7 Renewable Energies’ partner for the Oya hybrid energy project, which straddles the Western and Northern Cape provinces of South Africa.
The 128 MW Oya hybrid facility, which will eventually offer dispatchable renewable energy as part of the RMIPPPP, will use co-located wind turbines, solar photovoltaic (PV) arrays, lithium-ion batteries and a hybrid controller that orchestrates all three technologies to provide dispatchable power to the grid as and when needed.
In partnership with G7 Renewable Energies, Meadows Energy will begin construction of the Oya project this year and complete it within 18 months.
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.