South Africa will expedite procurement of independent power producers (IPP) generated renewable energy this year. The country’s President Cyril Ramaphosa announced this during his annual State of the Nation Address (SONA) at a hybrid sitting of Parliament. This is set to minimise the nation’s reliance on the state owned utility Eskom Holdings SOC Ltd. and help reduce the country’s debilitating power shortages.
South Africa has been experiencing recurrent power shortages that have affected the country’s economic growth ambitions and have been said to be responsible for the nation slipping into recession over the past 2 years.
Government will soon be initiating the procurement of an additional 11,800 megawatts of power from renewable energy, natural gas, battery storage and coal
President Cyril Ramaphosa
The procurement of new renewable energy capacity is in line with the country’s Integrated Resource Plan, a blueprint for the state’s energy mix to be implemented as Eskom power plants are set to be retired.
South Africa initiated one of the world’s most successful renewable-power programs starting in 2011, which garnered more than 200 billion rand ($13.7 billion) in investment from 112 producers.
Immediate procurement of “emergency power”
In an effort to alleviate the nation’s power crisis, South Africa’s Department of Mineral Resources and Energy (DMRE) initiated a process for procurement of “emergency power” through a programme known as the “Risk Mitigation Independent Power Purchase Programme” (RMIPPP). Ramaphosa said the successful bids for the procurement of 2 000 MW of emergency power is set to announce in the coming weeks. The winners will be selected from a shortlist of 28 bidders.
Requests for proposals (RFPs) to supply 2 600 megawatts from solar and wind projects will be issued over the next few weeks, with another bidding round planned in August, according to the president. South Africa is set to procure 6,8GW of renewable energy over the coming 12 months. Licensing requirements will be reviewed in the next three months to make it easier for businesses to produce electricity for their own use, he said.
The government will amend Schedule 2 of the Electricity Regulation Act within the next three months to increase the licensing threshold for embedded generation.
“Recent analysis suggests that easing the licensing requirements for new embedded generation projects could unlock up to 5 000 MW of additional capacity and help to ease the impact of load-shedding,” Ramaphosa said
A recent report by Meridian Economics suggests that increasing licence-exemption cap to 50MW could eradicate South Africa’s electricity challenges as most large businesses generate power for their own use.
Eskom restructured
State owned utility which produces about 95% of the nation’s power Eskom has undergone restructuring in a bid to ensure its survival. The debt ridden utility has not been able to consistently keep up with the nation’s power demands resulting in rolling blackouts which have curbed output in the continent’s most industrialized economy.
“Eskom has been restructured into three separate entities for generation, transmission and distribution. This will lay the foundations for an efficient, modern and competitive energy system,” announced Ramaphosa.
The South African government has also amended electricity regulations to allow qualifying municipalities to procure energy from independent power producers and reduce their reliance on ailing state utility Eskom.
