South African Energy Minister, Gwede Mantashe, has announced eight independent power producers (IPPs) as the preferred bidders for the “emergency round,” the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP). The projects will provide power generated by solar energy, wind, liquefied natural gas (LNG) energy, and battery storage.
Around US$3 billion (R45 billion) in private investment is expected to be injected into the South African economy through these projects. The projects must have an average local content of 50% during the construction period. The projects should be at least 51% owned by a South African entity and have a black ownership percentage of 41%.
RMIPPPP is an emergency energy procurement initiative that the South African government launched last year to curb the power deficit that the country is currently experiencing, and to reduce the extensive utilisation of diesel-based peaking electrical generators.
The projects have a combined capacity of 1 845 MW, and the tariffs bid ranged from R1 468/MWh to R1 885/MWh. This procurement window will be essential in helping South Africa reduce its power backlog, and curb load shedding. Eskom, which supplies 95% of the country’s power needs announced last week that it would have a shortfall of 4 000MW over the next 5 years.
Projects in the Emergency Round
At least 28 bids with a potential generation capacity of 5 117MW submitted their bids, only 8 were successful. An estimated 3 800 job opportunities will be created during the 18 months construction period and a further 13 500 during the 20-year Power Purchase Agreement (PPA) term
Speaking on the criteria used to determine Preferred Bids, Minister Mantashe cited quality and quantity as a key factor plus “value for money”.
“The quantity and quality of the bid responses and potential megawatt of contracted capacity allowed for a competitive price evaluation. All compliant bids were subjected to local and international benchmarking which is necessary to ensure that we receive Value for Money as required by the legislation,” said Mantashe.
The projects award for RMIPPPP are:
- ACWA Power Project DAO
- Karpowership SA Coega
- Karpowership SA Richards Bay
- Karpowership SA Saldanha
- Mulilo Total Coega
- Mulilo Total Hydra Storage
- Oya Energy Hybrid Facility
- Umoyilanga Energy
Hybrid energy systems
Two projects of the eight preferred bidders in RMIPPPP incorporate wind, solar and storage technology on a utility scale, which is a first for South Africa. Hybrid projects enhance the reliability and stability of the power generation system, and they do not always require grid expansion, as hybrid grids produce power at different intervals and during complementary seasons.
“An advantage of renewable energy hybrid systems lies in their ability to combine two of the fastest growing renewable energy technologies. Hybrid systems can also take advantage of the complementary nature of solar PV, which produces power during the day, and wind, which produces most of its power at night,” says Ntombifuthi Ntuli, CEO of SAWEA.
The advantage of hybrid systems, when incorporated with storage, is that the power is ‘dispatchable’. So, when the wind or solar systems are not generating power, hybrid systems provide power through batteries. Whilst the battery capacity needs to be large enough to supply electricity during non-charging hours, when they run low, the generating plant can provide power to recharge the batteries.