Economic spin-offs offered in South African second renewables round

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Dipuo Peters The response was well above the 1 275 MW allocated for the March window

The South African government has confirmed that it received a total of 79 tenders, representing 3 233 MW of potential power generation capacity, during the second bidding round under its renewable- energy independent power producer (IPP) purchase programme, which closed on March 5.


Energy Minister Dipuo Peters said the response from IPPs was well above the 1 275 MW allocated for the March window, as well as the more than 2 300 MW still available for allocation under a programme that aimed to procure 3 725 MW of renewables capacity that could be introduced to South Africa’s electricity network between 2014 and 2016.


The preferred bidders for the second round would be named on May 14.


In December, the initial 28 preferred bidders were named along with solar and wind projects collectively representing 1 416 MW of potential capacity. These developers had until June to take their projects to financial close.


No technology breakdown was provided for the March bids, but Peters reported that the projects were located across all nine provinces and concentrated especially in the Northern Cape, the Western Cape and the Eastern Cape.


The second-round bids also offered pricing, as well as economic development spin-offs far superior to those offered by the initial 28 preferred bidders, which generally stuck with the prescribed pricing caps and localisation stipulations outlined in the bidding documentation.


Prices had been capped for each technology, with wind pro- jects to be priced at below 115c/kWh, solar photovoltaic (PV) and concentrating solar power, below 285c/kWh, while a cap of 107c/kWh had been set for biomass, 80c/kWh for biogas, 60c/kWh for landfill gas and 103c/kWh for mini hydro.


“Thus, the level of competition for ‘preferred bidder’ status in this window is expected to be very high. “Bidders with good prices and higher economic development have a higher chance of succeeding, subject to having met the qualification criteria,” Peters said.


Government was still officially aiming to procure 1 850 MW of onshore wind, 1 450 MW of solar PV, 200 MW of concentrating solar power, 75 MW of small hydro, 25 MW of landfill gas and 12.5 MW apiece of biomass and biogas capacity. However, these allocations might change should there be undersubscription from some technologies and an oversubscription for others.


The evaluation of the tenders was currently under way at a secure location in Gauteng and would be evaluated under six streams, including environmental acceptability, land security, commercial robustness, economic development, financial viability and technical competence.


The legal evaluation would be conducted by Bowman Gilfillan, Edward Nathan Sonnenbergs, Ledwaba Mazwai and Webber Wentzel. The technical evaluation would be conducted by Mott MacDonald, while the financial evaluation would be completed by Ernst & Young and PricewaterhouseCoopers.


Peters said that, given the level of oversubscription, government would have to make a call on how it would manage the processs in future, indicating that it could well be extended to begin taking up some of the additional renewables allocation catered for under the Integrated Resource Plan (IRP) for electricity.


The IRP, which would be reviewed during 2012, but not revised, indicated that more than 17 000 MW of renewables capa- city would be added between 2010 and 2030, with the full plan envisaging the addition of some 40 000 MW over that same time horizon.


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