Time running out to salvage 23 rejected wind energy projects

The South African Wind Energy Association (Sawea) wants international experts to assist in salvaging the 23 wind generation projects that failed to achieve preferred bidder status in the sixth bid window of the government’s Renewable Energy Independent Power Producer Procurement (Reippp) programme.

The bidders have collectively invested about R100 million in these projects, just to be left out due to a lack of connection capacity in Eskom’s transmission grid in the Northern, Eastern and Western Cape.

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This came as a shock since they had relied on Eskom’s Generation Connection Capacity Assessment, which was published in March 2022 and indicated that there was enough capacity.

The first paragraph of the document reads: “The publication of the Generation Connection Capacity Assessment of the 2024 transmission network (GCCA-2024) is to inform stakeholders of the potential capacity available on the Eskom transmission network to facilitate connection of generation projects.”

In what Eskom COO Jan Oberholzer on Monday (23 January) admitted in an interview with Moneyweb editor Ryk van Niekerk on RSG Geldsake was a communications failure, the connections points were not reserved for the bidders and neither was the access data updated regularly.

In the meantime, projects aimed at power generation for private clients took up all the available capacity and overtook the bidders in the public procurement process.

This resulted in only five solar projects – with a mere 860MW of combined generation capacity – being announced as preferred bidders.

This after President Cyril Ramaphosa, as part of his energy emergency plan, in July last year increased the initial 2 400MW bid round to 4 200MW in an effort to add generation capacity to the grid to address load shedding.

Failure

Peter Attard-Montalto, who leads on political economy, markets and the just energy transition at Intellidex, wrote on his i-Blog: “The failure at end-2022 of the REIPPP bid window 6 means plans are now 3GW down on where we otherwise should be, with bid window 7 also looking deeply problematic. Substantively ending load shedding at end-2024 that last year looked possible, if hard, is now impossible.”

According to Eskom, all available connection capacity in the three Cape provinces has been taken up, which would mean the total investment in these projects will be wasted. They were positioned where the wind resources are best and cannot be moved to other locations.

Niveshen Govender, CEO of Sawea, says the industry is asking for the appointment of a consultant experienced in managing constrained grids to advise Eskom on ways to integrate these projects into the network.

He notes that countries in Scandinavia as well as Australia and the state of California in the US have dealt with the same challenge and South Africa can learn from them. “The most difficult thing will be to get Eskom to agree to it and share the information.”

Govender adds that the industry is prepared to carry the cost. If Eskom agrees, it can be done within six months, he says.

Time is of the essence

The timeframe is important, because the authorisations for the 23 projects, including environmental approval, are only valid for another year. Thereafter they lapse and the time and money spent will have been in vain.

Possible solutions include grid sharing between solar and wind projects.

“Solar power is generated during the day and wind generation is mostly at night. Internationally it was found that there is only a 7% overlap,” says Govender.

“It is complex to manage such a network, but not impossible,” he adds.

Govender says it is also worth investigating the possibility of connecting to the distribution network rather than transmission. “Germany has overcome limitations on its transmission grid with rooftop solar.”

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Sawea also wants to establish where the funding for the R72 billion investment in the transmission grid over the next five years, which is required according to Eskom, will come from.

In this regard Attard-Montalto, writes: “The bid window 6 debacle further highlights that we are not paying enough attention to transmission, and that the R72bn of transmission investment needed in the next five years is nowhere near likely to be achieved. This creates a hole in the ability to get enough energy on grid in 2024-2027, — again pushing out the end of load-shedding further.”

Govender says to prevent a repeat of the Bid Window 6 shock, Eskom’s queueing system for grid access must be fair and transparent.

“Currently no one know how it works.”

Projects aimed at private procurement should not be allowed to overtake those for public procurement, he says.