Lack of solar preparedness could see capacity reallocated to wind

Potential renewable energy independent power producers that had not already engaged funders for projects that could be submitted as part of the current bidding round for the first 3 725 MW of renewables capacity were already too late, Kensani Capital Advisory and Investments MD Coenraad Krige warned this week. The deadline for submission was November 4.

Speaking at a networking session of the South African Photovoltaic Industry Association (Sapvia) in Cape Town, Krige also cautioned applicants to ensure that their bids fully met the qualifying criteria outlined in the bidding documentation to be considered by the Department of Energy.

“Make sure that you are ready when you are going into bid . . . Our experience in other sectors is that government will take quite a hard stance if you put half baked projects into bid,” he addeed.

Banks would also closely scrutinise whether projects met the government’s qualifying criteria before funding would be approved.

Some Sapvia members expressed concern about government’s capacity to evaluate the bids. But Krige countered this argument by suggesting that the true threat was a possible lack of capacity within the private sector.

He said it was possible that banks and lawyers might not be in a position to cope with the demand being generated. “We are struggling to find lawyers to work on projects. The capacity is going to be a challenge in delivering on these megawatts and we are seeing the same problem in the banking sector.”

For the photovoltaic (PV) industry, there could be strong competition from the wind sector, especially given that the wind sector was already more developed at the scale required. “From our understanding, over 12 GW of wind in development has been registered with the Department of Environmental Affairs and is in some process of environmental approval. I think that is going to be a key challenge. I think the current number for PV is [only] in excess of 2000 MW.”

He added that it was important to note that even though PV energy has been allocated 1 425 MW out of the first 3 725 MW to be procured, government had reserved the right to reallocate this generation capacity.

Should wind be oversubscribed, government might choose to reallocate some of the PV capacity to wind. “There are various driving factors for that, and the lower cost of wind generation is one of them. So don’t be surprised if things change throughout the life of the programme.”

Responding to an audience question, Krige said he guessed that approximately 300 MW to 400 MW of PV bids will qualify in the first bid window with a similar amount in the second window. “I would be surprised if the full 1 425 MW is taken up before the fourth bid window, but that’s my best guess at the moment from all the market information we have.”