DMRE launches bidding process for almost 8 000MW from IPPs

After a six-month delay, the Department of Mineral Resources and Energy (DMRE) launched the seventh bid window for the procurement of 5 000 megawatts (MW) of electricity from independent power producers on Thursday.

On the same day, it also issued requests for proposals (RFP) from independent power producers for 2 000MW of generation capacity from gas (Gasipppp) and 615MW of battery storage.

Brian Day, chair of the South African Independent Power Producers Association, welcomed the move, as did Niveshen Govender, CEO of the South African Wind Energy Association.

This follows a year of unprecedented load shedding as demand outstrips supply. According to the popular app EskomSePush, South Africans were, up to 14 December, subjected to load shedding 82% of the year, for a total of 409 170 minutes, which is 86% more than any other year.

The renewables RFP calls for 1 800MW of solar PV and 3 200MW of wind generation, which Govender said 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.”

He said contrary to a previous geographically agnostic approach, this bid round considers the country’s grid constraints. The DMRE explicitly directs bidders to access available supply areas based on the Generation Connection Capacity Assessment of the 2025 Transmission Network.

Read: Reipppp: The barriers hindering the ramp up of renewable generation

This follows the partial failure of bid window six when none of the 23 wind projects achieved preferred bidder status due to grid constraints. This was after private sector projects overtook those participating in the public procurement process, and no more grid connections were available for the 23 projects. This was a huge shock for the industry, as developing a bid costs significant amounts of money, time, and expertise, which goes to waste if it is unsuccessful.

Read:
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Govender said to ensure a successful bid window, the industry is mindful of outstanding critical issues that 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. 

“Therefore, ongoing constructive engagement with Eskom will be maintained until these issues are effectively resolved.”

Deadlines

The bids must be in by the end of April next year, and connection to the grid must follow within 24 months of commercial close. 

The Gasipppp, the first to target this technology, calls for 2 000MW of gas generation capacity, which is land-based and situated anywhere in South Africa. Engineering News reports that a separate procurement process will be held for 1 000MW of capacity to be developed near the Port of Ngqura in the Eastern Cape.

Bids close on 30 August 2024.

The battery storage programme, the second of its kind, calls for 615MW of battery energy storage capacity at eight storage facilities close to specific substations in identified sites. 

A bidders’ conference will be held on 17 and 18 January 2024, where the DMRE will provide more information. 

The DMRE anticipates announcing the preferred bidders within three months after the bid submission deadline.

Read:
Eskom opens Africa’s largest battery energy storage facility
Grid storage is the missing link in SA’s electricity crisis
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