South Africa: Breaking News: Expansion And Acceleration Of The Independent Power Producer Procurement Programme

In Cape Town this morning, the Minister of Energy, Ms Tina Joematt-Petterson addressed the Acting DG, Senior Management, DOE Officials and management, members of the media and industry players on the expansion and acceleration of the Renewable Energy Independent Power Producer Procurement Programme.

The Minister officially confirmed the 13 preferred bidders under Round 4 of the Programme,  which are expected to reach Financial Close in quarter 4 of this year and reach commissioning in 2016 resulting in  an additional 1121MWs being introduced to the national grid.

The 13 preferred bidders for Round 4 are:

Biomass
Ngodwana Energy Project – 25MW

On-shore wind
Roggeveld wind farm – 140MW
The Karusa wind farm – 140MW
The Nxuba wind farm – 139MW
Golden Valley wind – 117MW`
Oyster Bay wind farm – 140MW

Solar PV
Sirius Solar PV Project One – 75MW
Droogfontein Solar 2 – 75MW
Dyason's Klip 1 – 75MW
Dyason's Klip 2 – 75MW
Konkoosies II Solar Facility – 75MW
Aggeneys Solar Project – 40MW

Hydro
Kruisvallei Hydro -5MW

Norton Rose Fulbright is acting for a substantial number of the projects announced.

What really has the market reacting and which will no doubt create the necessary momentum to address the energy crisis in our country is that the Minister announced an expansion and acceleration of the programme through a number of initiatives.

She stated that as a result of the success of Bid Window 4, particularly in relation to price and economic development proposals, that a decision to allocate additional MWs under the bid window 4 process has been taken. This is being done through the enabling provisions of the current  RFP. It is anticipated that an additional 1000MW will be allocated and additional preferred bidders announced. The IPP Office is to produce a report in this regard for consideration by the Minister by no later than the end of April. An announcement of preferred bidders is anticipated to be made no later than the end of May 2015.  This certainly is a positive outcome for those developers who had bid in Round 4 who were very close in price and economic development to the  preferred bidders announced today.

A development that was not anticipated by the market was the Minister announcing that a Request for Further Proposals for an expedited procurement process of 1800MW from all technologies in early June 2015 would be released. This bidding process, she stated, would be open to all unsuccessful Bidders from the previous Bid Windows, 1 to 4, which are ready to re-submit. A diligent, but shorter, simplified and competitive procurement process for this Bid Window will be followed. Again this is a step in the right direction as investor mood will be uplifted as these projects are all ready to be re-assessed and bid again.

So for the year 2015 – there is a lot on the go for the market and the Department – Round 4 preferred bidders, announcement of additional preferred bidders and an additional RFP for all those projects that were not successful to date

The Minister went further to state that a redesigned RFP for the Fifth Bid Submission will be released in the second quarter of 2016. She announced that the RFP has been redesigned to include changes to the definition of local community and the introduction of mechanisms to ensure early, efficient and equitable benefits to the communities and the local content / industrialisation regime. The Minister indicated that the provisions of the revised RFP will  address and take into account the constrained distribution and transmission systems that the country is currently dealing with.

The Small Projects Programme procurement process is still in progress and the evaluation of bids is expected to be finalised during April 2015.

To maintain the momentum of the programme and to ensure future Bid Submission phases, the Minister has also announced that she intends to submit to NERSA, a new determination for its concurrence, for an additional 6 300MW to be allocated under the Renewable Energy IPP Procurement Programme.

In relation to the other forms of energy currently being considered by the Department, the Minister has determined that 800MW has been allocated for co-generation and the Co-Generation RFP will be released to the market in April 2015.  The announcement of preferred bidders is expected to be made during the third quarter of 2015. The Minister has indicated that the allocation may be increased, depending on responses received from the market.

The Minister confirmed that the Department is engaged in a process to design a Gas to Power procurement programme, to be aligned with the Gas Utilisation Master Plan for South Africa, which has not yet been settled. The Minister expects that this programme will stimulate a gas sector which could contribute to the growth of the economy. The Minister confirmed that the Gas to Power Request for Information  will be released to market by the end of April 2016. The Gas to Power Procurement Programme will be designed based on the responses received.

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