South Africa: Renewable Energy Programme to Bring in Billions

Renewable energy
S. Africa is placing emphasis on renewable energy

South Africa’s Department of Energy says it is expecting R47 billion to be invested in the country through Window 1 of the Renewable Energy Independent Power Producer Programme (REIPPP).

The department introduced the REIPPP in August 2011, with the first bid submission for Window 1 scheduled for 4 November 2011.

The outline for the first 28 preferred bidders – who were announced on 7 December during COP17 – is now in place and the department says it is ready to sign contracts with the bidders, which will unlock the massive investment.

Window 1, which sought 1 400 megawatts of renewable energy, gave bidders (in wind and solar projects) until June this year to reach financial close, but due to issues – including approvals by government institutions – the date had been postponed.

President Jacob Zuma announced in his State of the Nation Address a massive infrastructure plan comprising various development projects. One of the Strategic Integrated Projects includes green energy in support of the South African economy.

Briefing reporters on Monday, Energy Minister Dipuo Peters said the department had been working closely with the preferred bidders in Window 1 to conclude all contract documentation, including the Power Purchase Agreement and Implementation Agreement.

“The delay for financial close was largely related to government approvals. We apologise for shifting the timeframes,” said the minister.

The delays in government approvals were caused by the need to have fully populated contracts to be presented to the relevant structures within government for approval.

“I’m pleased to announce that the country will receive about R47 billion of investment in renewable power generation through Window 1 preferred bidders,” said Peters.

The investment will provide job opportunities, especially for those in rural where renewable power plants are located.

According to the Integrated Resource Plan (IRP2010) – which is a 20-year projection on electricity supply and demand – about 42% of electricity generated in South Africa is required to come from renewable resources.

The IRP2010 places specific emphasis on broadening electricity supply technologies to include gas, imports, nuclear, biomass, renewables (wind, solar and hydro), in response to both the country’s future electricity needs as well as reduce its CO2 emissions.

Originally, 53 bids amounting to 2 128 MW were received across wind, solar PV, solar CSP and small hydro. The evaluation resulted in 28 bids, with a total MW of 1 416 being selected as preferred bidders in the first window.

The wind and solar PV projects are expected to be integrated into the country’s national energy grid during 2014.

“The signing of agreements for Window 1 preferred bidders will take place on 5 November 2012,” Peters said, adding that bidders were expected to honour the commitments made in their bids.

Should bidders fail to comply with the commitments, penalties such as the termination of the power purchase agreement, will be implemented.

Peters said she had received concurrence from the National Energy Regulator of SA (Nersa) for additional allocations to the renewable programme, base load generation and the Medium Term Risk Mitigation Plan generation.

Earlier this month, Peters said she was considering a second determination that would provide additional megawatts in the renewable energy space.

“I will be promulgating these determinations before the end of the year,” said Peters.