DBSA quietly tenders for advice on alternative auction model for South Africa’s renewable energy IPP procurement programme

  • Once globally respected as the best renewable energy procurement model in the world for emerging market countries, South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), has had three failed procurement programmes since the IPP Office lost its independence seven years ago and was seconded to the Department of Mineral Resources and Energy under the leadership of Gwede Mantashe.
  • In the last six years only 150MW of new generation capacity has been connected to the grid. Read more
  • On 11 October 2023, the Development Bank of Southern Africa released a tender calling on consultants for advice on a viable alternative REIPPPP model.
  • Eskom this week reported that their generation supply constraints were partly worsened by the delays in connecting more capacity to the grid through IPP procurement as expected under the Integrated Resource Plan (IRP2019), resulting in a constant energy shortfall of approximately 5 100GWh for the year.
  • This shortfall meant an increase in stages and frequency of loadshedding and over utilisation of open-cycle gas turbines.
  • Loadshedding was implemented on 280 days during the 2022/2023 financial year.

The Department of Mineral Resources and Energy , National Treasury and the Development Bank of Southern Africa established the IPP Office for the specific purpose of delivering on the REIPPPP objectives. The IPP Office is tasked with the management of energy procurement.

Related news: DMRE and IPP Office flout BBBEE rules in adjudicating REIPPPP Bid Window 5 

The Development Bank of South Africa says that in its current form, the REIPPPP model is “expensive” to applicants and places a “financial burden” on the IPP Office. They quietly released a tender last month calling for consultants for advice on a viable alternative model.

The tender, which was set to close today, reads: Procurement of a Transaction Advisor to Review of the Renewable Energy IPP Procurement (REIPPPP) and Evaluation Model for Improvement in Cost Effectiveness and Efficiency. Exploring and Recommending an Alternative Auction Model for the REIPPP Procurement Programme.

The self-funded Independent Power Producer Office, is financially burdened as “the cost of the evaluation is not proportional to the amount of megawatt procured,” the tender document states.

Due to the “extensive nature of the qualification and evaluation criteria,” the cost of participation for applicants in REIPPPP has also been described as “expensive”.

“A streamlined auction process could reduce the cost of the bidding process for the IPP Office, but also reduce development costs for bidders that will be reflected in more affordable tariffs for the consumer,” the document states.

A DBSA media announcement made on 30th October 2023 states that the deadline for submissions has been extended to 9th of November 2023 @ 23:55. 

Link to the tender notice HERE

Author: Bryan Groenendaal

2 Comments

  1. It is the right way to go. Every thing placed under the current government’s control is turned to ashes… the incompetence is staggering and in a shameless shambles.

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