The additional 5 000 MW of new generation capacity from Independent Power Producers (IPPs) would promote energy security, Sawea said.
The South African Wind Energy Association (Sawea) has welcomed the decision by the Department of Mineral Resources and Energy (DMRE) to initiate Bid Window 7 under the Renewable Energy Independent Power Producers Procurement Programme.
The DMRE yesterday invited interested parties to register prospective bids for 5000 MW of renewable energy capacity, including 3 200 MW of onshore wind and 1800 MW of solar photovoltaic (PV) power.
“The additional 5 000 MW of new generation capacity from Independent Power Producers (IPPs), with a substantial portion of this capacity (3 200MW) dedicated to wind energy, will help address energy security. The electricity generation profile from wind projects will prove beneficial to the system operator in reducing the impact of load shedding,” it said.
“Given the energy challenges the country is facing, the qualification criteria has been developed to promote the participation of projects that are fully developed, and will be able to be constructed and connected to the national grid as soon as possible, but not later than 24- months post Commercial Close,” the DMRE said.
The last day to submit applications to obtain a Cost Estimate Letter from local power utility Eskom is January 31, 2024. Bid submission is scheduled for April 30, 2024, and the winners are expected to be announced about three months post the Bid Submission Date.
Sawea noted in a statement yesterday that contrary to a geographically agnostic approach, this bid round took into consideration the country's grid constraints.
The DMRE explicitly directed bidders to assess available supply areas based on the Generation Connection Capacity Assessment (GCCA) of the 2025 Transmission Network (GCCA 2025).
Niveshen Govender, the CEO of Sawea, expressed appreciation for the Department's move towards building new generation capacity through renewable energy, citing its significant impact on sector industrialization. Govender emphasised the importance of rolling procurement to attract market investment and mitigate risks.
“To ensure a successful bid window, the industry is mindful of outstanding critical issues which require clarification, particularly those related to grid capacity and its allocation. In addition, the industry will examine the bid window document to assess its implications for upcoming projects set to come online,” he said.
Therefore, ongoing constructive engagement with Eskom would be maintained until these issues are effectively resolved.
Govender said the move held promising prospects for creating new industries, fostering job growth, and promoting localization across the entire value chain.
The DMRE has set a bid submission date of April 30, 2024.
South Africa needs to urgently generate more power as it faces a power crisis.
In Eskom’s interim results report this week, it noted that renewable and short-term IPP programmes had delivered about 2.7TWh less than target, contributing to the overall generation capacity shortfall.
The supply constraints continued to have an adverse effect on financial performance, with Eskom and IPP-owned Open Cycle Gas Turbines (OCGT) producing 2.9TWh at a cost of R18 billion.
South Africa is committed to a just energy transition, as it balances it energy security and its sovereign rights with building a greener footprint.
It took part in COP 28 at the Dubai Climate Change conference this month, with calls for transitioning away from fossil fuels in energy systems in a just, orderly and equitable manner so as to achieve net zero by 2050.
Countries agreed to triple renewable energy capacity globally and double the global average annual rate of energy efficiency improvements by 2030, at the conference.