Green light given for 28 IPP projects

The first 28 preferred renewable energy independent power producers (IPPs) to add 1 416 megawatts of renewable energy capacity to the grid from 2014 to 2016 were named by Energy Minister Dipuo Peters in Durban yesterday. Four further bidding processes are planned for 2012 and 2013. The department, which has a target to procure 3 725MW of renewable energy capacity from IPPs by 2016, said the 28 bidders would have until June next year to take their projects to financial closure, while 26 of the selected IPPs would need to be generating power by mid-2014. The two concentrated solar power (CSP) plants were given a deadline of 2016. Peters said if bidders failed to keep to the timelines outlined in the tender, their status as preferred bidders could be withdrawn.

Chosen projects included 18 using solar photovoltaic (PV), eight using onshore wind and two using CSP. Solar PV capacity amounts to 631.53MW, wind will provide 633.99MW and CSP accounts for 150MW. No small hydro projects were selected although it featured in the tender process. The department said it received 53 bids for the first bidding window, which ended on November 4. The selected projects are located across seven provinces, excluding KwaZulu-Natal and Mpumalanga.

Peters said 2 309MW was available for the next bidding windows and the announcement would be made in due course regarding the process. She said Eskom needed these partnerships to cope with the rising energy demand. “As you might be aware the electricity supply-demand situation is very tight and it will remain so for a while. “Eskom is doing everything in its power to improve the situation, but they need our partnership and assistance to use energy sparingly and responsibly,” she said. Eskom spokeswoman Hilary Joffe said the utility fully supported the IPP process as it advanced both power supply and climate change goals considerations.

Eskom, which will be buying the IPPs’ output, was not allowed to take part in the bidding process as it was intended to bring new players in to the market. Joffe said power purchase agreements with producers would be signed as soon as the process was concluded. Eskom also has its own renewable energy projects on the cards. The utility recently received $615 million (R5 billion) in loans from the World Bank and African Development Bank to develop a 100MW wind power plant and a 100MW solar project. Wind turbine supplier Suzlon, whose 135 MW Cookhouse wind energy facility joint venture with African Clean Energy Developments was among the projects approved by the department, said the project was the first step in their plans to build a 1 gigawatt renewable energy portfolio over the next three years.

The Cookhouse wind energy facility in the Eastern Cape is intended to have up to 200 wind turbines, generating enough electricity to power more than 88 000 homes. Nedbank Capital, which backed 15 of the 53 bidders, said it had already secured 40 percent of the funding for the first phase of the IPP programme. Mike Peo, the head of infrastructure, energy and telecoms at Nedbank Capital, noted that the level of interest shown by prospective IPPs during the bidding process was encouraging. “The fact that more than 400 prospective bidders registered their interest in the lead-up to the tender closure demonstrates a readiness by industry in this country to get behind this important component of South Africa’s developing green economy,” he said.