Minister orders ‘expansion’ of power production programme in South Africa

Out-Law News | 22 Apr 2015 | 4:08 pm | 1 min. read

South Africa’s energy minister has ordered officials to “expand and accelerate” the country’s independent power producer (IPP) procurement programme to help boost the country’s struggling electricity generating infrastructure.

Tina Joemat-Pettersson said letters of confirmation (6-page / 128 KB PDF) were issued to 13 preferred bidders in April for generating facilities that will eventually make an extra 1,121 megawatts (MW) of electricity generating capacity available to the national grid.

In addition, Joemat-Pettersson said she had asked the Department of Energy (DOE) to “simplify” an existing ‘small projects programme’, which is aimed at procuring renewable energy from small-scale IPPs, “to provide for a less complex and costly bidding process”.

“Resolving South Africa’s energy challenge remains a critical element of the South African cabinet’s list of nine strategic priorities to be pursued in partnership with the private sector and all stakeholders,” Joemat-Pettersson said.

The need for a rapid expansion of South Africa’s power infrastructure has become acute in recent months as energy providers have struggled to meet the country’s growing needs.

According to the DOE, the “flagship” national renewable energy IPP programme has led to the approval of projects which have added a total of 4,322 MW of generating capacity in less than four years.

A total of 79 projects have been approved by the DOE to date, including those approved in April, with a combined electricity generating capacity of 5,243 MW from all bids for renewable energy projects. The DOE said this represented “a massive investment of 168 billion rand (ZAR) ($14bn) in economic infrastructure in our country, which will contribute to economic growth and job creation, in addition to the contribution it makes to security of electricity supply”.

The preferred bidder projects confirmed in April included generating facilities for biomass, onshore wind farms, solar and hydropower. The DOE said it expects the financial close for the projects in the fourth quarter of this year with commissioning from November 2016.

The DOE said a request for further proposals, to be dealt with under a new “expedited” process, will be issued “no later than early June 2015”. The move is aimed at receiving bids for a further 1,800 MW of generating capacity “from all technologies”, to be selected under “a diligent, but shortened and simplified, competitive procurement process”.

Up to 95% of South Africa’s electricity is currently generated by coal-fired power stations and the country is among the world’s top 25 producers of greenhouse gases, according to government figures.

However, renewable energy from South Africa’s first wind and solar plants generated a “net financial benefit” of around $702,000 for the country in 2014, according to a survey published earlier this year by the South African government-owned Council for Scientific and Industrial Research.

Figures released last year showed that South Africa had moved into the top 10 rankings of countries harnessing renewable energy from the sun, having connected more than half-a-gigawatt of utility-scale solar power to the national grid.