Simplified tender documentation for small-scale renewable energy independent power producer (IPP) projects of between 1 MW and 5 MW were currently being prepared and should be released by November, the South African government reported on Wednesday.
Speaking at a media briefing held on the sidelines of a renewable energy bidders conference being hosted to canvass responses to the Department of Energy’s (DoE’s) request for proposals (RFP) for the procurement of 3 725 MW of renewables capacity from IPPs capable of delivering projects by 2016, the National Treasury’s Karen Breytenbach said work was currently under way on the documentation.
The tender should be available for release by the time the first bid window closed for the current RFP on November 4, 2011, and she promised that it would be “much simpler” and would “lower the barriers to entry”.
Government acknowledged that the legal, financial and environmental stipulations contained within the current RFP, which was released in August, were stringent, making it difficult for smaller businesses and entrepreneurs to participate in the deployment of renewable energy projects.
In fact, many smaller participants have even criticised the fact that government was demanding a R15 000 fee to access the RFP documentation, saying that the fee, together with the guarantee of R100 000/MW bid, had created unnecessary barriers to entry.
But government argued that the qualifying criteria were appropriate in order to encourage developers with proven records to participate, as South Africa needed to ensure that it contracted with companies capable of delivering within the tight timeframes outlined.
Most of the technologies (wind, solar photovoltaic, biomass, biogas, landfill gas, minihydro) would have to enter commercial operation during 2015, with concentrating solar power developers having been given until 2016, owing to the fact that the technology was relatively immature.
The initial developers would also have to pay a ‘development fee’ equal to 1% of the total cost of their projects, which government would ring fence to use in support of future renewable energy rounds.
The DoE has also released a RFP for ‘showcase’ renewables IPP projects that would need to be delivered ahead of the COP 17 climate talks, which were scheduled to begin on November 28.
Under this fast-track procurement process, projects would only be considered if they could be delivered by November 15 and some 20 MW of capacity could be procured under the scheme.
These projects would receive two-year power purchase agreements (PPAs) from Eskom, which had been designated as the buyer, but could be converted into projects accepted under the larger renewables procurement programme. Should that be the case new PPAs would have to be negotiated and that capacity would be deducted from the 3 725 MW sought under the RFP.