The South African Minister of Energy (the Minister) announced on 16 April 2015 that it has confirmed 13 preferred bidders for bid window 4 of the Renewable Energy Independent Power Producer Procurement Programme (REIPP Procurement Programme).
The successful projects are spread across onshore wind, solar photovoltaic, biomass and small hydro technologies. This announcement brings the total number of projects that have been appointed as preferred bidders under the REIPP Procurement Programme to 79.
It is expected that financial close for bid window 4 projects will occur in the fourth quarter of this year, with commercial operations starting from November 2016.
The Minister also announced some key measures aimed at accelerating and expanding the REIPP Procurement Programme. These include:
- utilising enabling provisions in the current programme to allocate additional megawatts to the bid window 4 procurement process;
- issuing a request for proposal (RFP) for an expedited process for the procurement of 1,800 MW across all technologies, which will be open to all unsuccessful bidders from previous bid windows that are ready for resubmission. The RFP for this expedited process will be issued by no later than June 2015 - the IPP Office will release more details on the proposed process in due course;
- releasing the RFP for bid window 5 in the second quarter of 2016. Key aspects of this RFP will include an amended definition of local community, mechanisms to ensure that local communities benefit early, efficiently and equitably and the local content and industrialisation framework;
- submitting a new determination to the National Energy Regulator of South Africa (NERSA), for its concurrence for an additional 6,300 MW of capacity allocation for future bid windows under the REIPP Procurement Programme; and
- simplifying the Small Projects Programme, currently underway, which seeks to procure renewable energy from small-scale independent power producers that are between 1 MW and 5 MW in size.
The Minister also stated that the South African Department of Energy (the Department) is in the process of designing a Gas to Power Procurement Programme for a combined 3,126 MW of capacity allocation. A Gas to Power request for information is expected to be released by the end of April 2015.
The Department is also in the process of designing a procurement approach for cogeneration. A cogeneration RFP is expected to be released in April 2015 with preferred bidders being announced in the third quarter of 2015.
The Minister also confirmed that the Department is forging ahead with procuring 2,500 MW under the Coal Baseload Procurement Programme currently underway.
Overall, the long-awaited announcement of preferred bidders for bid window 4 is an important step forward in maintaining the momentum of the very successful REIPP Procurement Programme.
The announcement of measures to accelerate and expand the REIPP Procurement Programme and plans regarding future procurement will be welcomed by prospective bidders and investors. It provides much needed certainty in relation to the Department’s commitment to the future rollout of renewable energy, coal, gas and cogeneration independent power producer procurement programmes, in order to keep the lights on and industry working.