Govt takes another step towards purchase of private power

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The South African government has released a nonbinding request for information (RFI) from potential developers of renewable energy, cogeneration and small-scale electricity projects for submission by October 7, 2010.

The renewable energy projects being sought are those that would be seeking to apply for South Africa’s renewable energy feed-in tariffs, or Refit, which currently includes onshore wind, certain solar technologies, biomass, biogas, small hydropower and landfill gas.

Also being sought, is information on small power projects, defined as “projects smaller than 5 MW but bigger than 1 MW”, and cogeneration opportunities.

The documentation has been released jointly by the Department of Energy (DoE) and the National Treasury and includes a response form, which is designed to provide high-level visibility of the companies pursuing, or interesting in pursuing, projects and the state of readiness of the projects.

The information garnered will form the basis of the release of a comprehensive request for proposals (RFP), which would signal the start of a competitive bidding phase.

Government has also advertised for transaction advisers to develop procurement documentation and design a procurement, evaluation and negotiation process for release by mid-November. The advisers are expected to be appointed by October 10.

The RFI issued to developers, meanwhile, is designed primarily to assess market interest and government says that a decision on the detail and timing of any RFP would depend on the information provided.

The DoE indicates that any decision on when and how it will proceed with a RFP should not be expected prior to mid-October, 2010.

However, it has provided indicative timelines, which indicate that the RFP will be released during November, with a cutoff for bids in March 2011.

In other words, the release of the RFP is likely to coincide with the proposed promulgation of the long-awaited integrated resource plan, or IRP2010, which should also be published for public comment in October.

The IRP 2010 will set out South Africa’s expected power generation mix for the next 20 to 25 years, and will be reviewed periodically.

Besides the IRP, the new generation regulations should be released for public comment in October, for promulgation in November, while the standardised procurement documentation should also be released in October.

South Africa has set a renewable energy target of 10 000 GWh, or 4% of the country’s installed base, by 2013, and hopes to expand the use of cogeneration technologies from 3,1% of total installed capacity to 10%.

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