SA’s bidding model facilitates big fall in renewables tarriffs

SA’s bidding model facilitates big fall in renewables tarriffs

Engineering News
19 May 2015

Energy Minister Tina Joemat-Pettersson reports that South Africa’s competitive-bidding model for the procurement of renewable-energy projects from independent power producers (IPPs) has delivered major cost reductions since its introduction in 2011.

Speaking to lawmakers on Tuesday, the Minister said that, in April 2014 terms, the average per kilowatt hour tariff for onshore wind had declined by 55% to an average of 62c, while the solar photovoltaic (PV) tariff had declined by 76% to 79c.

Following four bidding rounds under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), 5 243 MW had been procured, with 37 projects, or 1 827 MW, already connected the national grid.

The programme had also secured capital investment commitments of about R170-billion.

“On average, 15% of this energy was delivered to the power system during system peak periods, alleviating pressure on the power system. The energy contribution should grow to approximately 7 000 Gigawatt-hours per annum with the first 47 renewable-energy IPPs fully operational and producing at full capacity by mid-2016,” the Minister said.

By 2022, 17 000 MW of IPP capacity would be added to the South African electricity mix from renewable-energy, cogeneration, coal and gas sources, with the Department of Energy (DoE) set to procure the capacity at a rate of 2 400 MW a year.

The department had submitted new determinations to the National Energy Regulator of South Africa (Nersa) to enable the procurement of an additional 6 300 MW under the REIPPPP, while a request for proposals (RFP) for an additional 1 800 MW from existing bid submissions was on course for release by June 2015.

The DoE was also seeking Nersa’s concurrence for a determination relating to the procurement of 1 800 MW from co-generators, to be procured under a revised model.

A co-generation RFP would be issued soon and an announcement of the preferred bidders was expected during the third quarter of 2015. “The new approach will ensure that the approval process is expedited and financial close accelerated.”

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