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:
- 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.
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 initial eight projects were expected to reach financial close by no later than the end of July 2021 and be connected to the grid from August 2022. However, the deadline for financial close has been shifted to September 30, owing to several processing delays.
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
Nonprofit organisation Green Connection believes the RMIPPPP has failed in its objective to get power onto the grid.
Green Connection strategic lead Liziwe McDaid has said that the DMRE should abandon the programme.
McDaid argues that South Africa has spent more than a year trying to procure emergency power with no result and with no end in sight.
The initial bid date in the programme was extended to December 2020 and, although the winning bids were announced in March this year, the results were immediately questioned by experts.
Karpowership was selected as a preferred bidder to deliver 1 220 MW of the 1 845 MW sought by the RMIPPPP.
The powership projects have raised questions about the DMRE’s promotion of fossil fuels. Many have also questioned the nature of the contracts, which would be for 20 years, and not the short-term “emergency” solutions many had anticipated.
Karpowership’s projects have not been granted environmental authorisation and another bidder, DNG Energy, has sought legal action over claims that the RMIPPPP bidding had been subject to corruption.
“Adding to the controversy is . . . that there was no certainty regarding energy costs, as the prices on the electricity generated were purportedly linked to the dollar:rand exchange rate,” McDaid has said.
Green Connection has attempted to participate in the environmental-impact assessment, but has said that it is flawed as a process, since it has failed to consider the impacts of 20 years of underwater noise on marine life, and the knock-on effects of how this might undermine the livelihoods of small-scale fishing communities in the affected areas.
Karpowership has no decision from the Minister of Forestry, Fisheries and the Environment on its appeal against the department’s refusal to grant it environmental authorisation. It also has no electricity generation licence from the National Energy Regulator of South Africa. A parliamentary inquiry, as well as two potential court cases, are pending.
This is likely to impact on Karpowership’s ability to reach financial close on its proposed projects under the RMIPPPP by September 30, 2021.
The original financial close deadline for the initial eight projects was set for July 31, 2021. DMRE head of strategy Lucas Mulaudzi has said the delay was based on a lack of readiness by government and Eskom, rather than the bidders.
If Karpowership does not reach financial close, the projects will not be able to proceed.
DMRE deputy director-general Jacob Mbele has said that, should the projects fail to proceed, it is unlikely that South Africa will be able to secure similar dispatchable capacity that could be connected to the grid by August 2022.
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.