- Eskom has issued notice that five budget quotes for the grid integration of the remaining four projects in the RMIPPPP expired on 31 December 2023 and will not be extended further.
- This is after several budget quote validity period extensions were requested and granted by Eskom in an effort to assist in ensuring the success of these projects.
- These include Karpowership SA’s three floating gas powership projects at Coega (450MW) , Saldanha (320MW) and Richards Bay (450MW).
Eskom said that the expiration of the budget quotes regrettable as these projects were aimed at bringing much-needed additional generation capacity to the grid to alleviate pressure on the power system and minimise the impact of loadshedding.
The Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) was launched by the Department of Mineral Resources and Energy (DMRE) in 2020 as an emergency energy procurement programme aimed at addressing the country’s current energy challenges. The Independent Power Producer Office (IPPO) is the designated procurer for the RMIPPPP and Eskom Holdings SOC Ltd the designated buyer in line with the ministerial determination promulgated in 2020 by the Minister of Mineral Resources and Energy in terms of Section 34 of the Electricity Regulation Act.
The programme aimed to procure a total of 2 000MW from a range of dispatchable (mid-merit) technologies and energy sources including gas, solar photovoltaic (PV), wind, battery energy storage systems (BESS) and/or hybrid technologies. A total of eleven (11) preferred bidders were announced by the IPPO in 2021 and Eskom issued budget quotes for all eleven projects. Seven of those projects have since reached commercial close with the projects moving to the construction phase. The remaining four projects were issued with five budget quotes with one of the projects consisting of two gas and PV facilities located in the Eastern Cape and Northern Cape respectively.
The four projects were expected to reach commercial close at the end of July 2021. However, over time, following the issuing of the original budget quotes in 2021, the IPP Office announced several postponements of the scheduled commercial close dates. Consequently, several budget quote validity period extensions were requested by customers and Eskom duly considered these requests and granted extensions.
In July 2023, the IPP Office indicated that the projects’ long stop date for commercial close was fixed at 31 December 2023 and budget quotes’ validity periods were further extended to 31 December 2023 to enable these projects to reach commercial close. Eskom subsequently advised all affected customers on 31 July 2023 that no further extensions would be granted beyond the 31 December 2023 date. All affected applicants signed an acknowledgement that no further extensions of budget quotes’ validity periods would be granted.
Eskom’s governance process requires projects to be delivered expeditiously within approved timelines, scope and costs. The affected budget quotes have been extended for periods ranging between 20 months and 30 months. Furthermore, the costs, timelines and scope of work(s) indicated in the budget quotes are no longer valid beyond 31 December 2023.
The table below summarises the affected projects, which include four gas-to-power facilities and a solar photovoltaic (PV) facility with a total export capacity of 1 600MW (and contracted dispatchable capacity of 1 400MW):
The Gemsbok PV and Mulilo Coega Gas to Power Plant are from a single preferred bidder project and have a combined dispatchable capacity of 200MW. The effective total contracted dispatchable capacity for all affected projects is therefore 1 400MW.
The grid connection capacity that was provisionally reserved for these projects will revert to the pool of available capacity and will be allocated in accordance with the Interim Grid Capacity Allocation Rules to other projects that are ready to connect and generate much-needed electricity required by South Africa.
All affected customers have been duly informed of this decision and advised to apply for new budget quotes which Eskom will process accordingly.
Author: Bryan Groenendaal