R95-billion emergency power plan faces further delays

South Africa’s plan to add an estimated R95-billion worth of private power generation has been further delayed even as the country continues to suffer from intermittent power outages.

The signing of power purchase agreements by preferred bidders for the 2GW risk mitigation, or emergency power, programme was postponed due to “outstanding matters and conditions” with state-owned electricity utility Eskom, the department of mineral resources & energy said in a reply to questions on Thursday.

The bidders whose 11 projects were selected and their lenders need “adequate time to undertake due diligence reviews of the project agreements”, it said.

South Africa experienced record power cuts last year as Eskom has said that as much as 6GW of additional generation capacity will be needed to secure the system. Mineral resources & energy minister Gwede Mantashe in February 2019 predicted that a programme to source up to half of that amount could be online within two years, though no new projects have been added to the grid.

Eskom didn’t immediately reply to e-mailed questions.

Additional efforts to fill the gap have continued to face delays. The winners of the emergency power programme were picked early last year, but the round has been tied up by a court case lodged by a losing bidder that’s prevented projects from achieving financial close, the deadline for which has been delayed several times.

Projects selected last year in a fifth round, of South Africa’s previously successful auctions, to add 2.6GW of renewable power were originally scheduled to complete financing in March but haven’t done so.

Winning bidders

At the time they were announced, chosen projects for emergency power equated to R45-billion and the fifth renewable auction drew 25 successful wind and solar bids that would result in R50-billion of investment.

Winning bidders in the emergency power round included Karpowership, TotalEnergies, Acwa Power, Électricité de France and Scatec. Those in the renewable round included Mainstream Renewable Power, Scatec, Globeleq and African Rainbow Energy & Power.

Private developers have also awaited the opening of the sixth bid window for bids of another 2.6GW of power, which Mantashe said would occur this month.

Consultations with Eskom over the emergency power agreements are under way and a new date for the signing will be communicated, the department said.  — (c) 2022 Bloomberg LP