Global IPP Sees South Africa’s Power Woes Persisting

  • Bloomberg reports that Africa’s biggest renewable power company said it will take years for South Africa’s electricity supply woes to ease after the government’s bias toward coal led to the collapse of wind and solar energy manufacturers.
  • That legacy is being exacerbated by global supply chain issues that are slowing the construction of renewable plants, Chris Antonopoulos, chief executive officer of Amsterdam-based Lekela Power, said in an interview.

South Africa is suffering its worst ever power cuts as the aging and poorly maintained coal-fired plants of state utility Eskom Holdings SOC Ltd. suffer frequent breakdowns. Under President Cyril Ramaphosa, the continent’s most industrialized country is  now pushing for more renewable energy, but it’s still reliant on coal for more than 80% of its power.

“There were two or three years when Eskom was arguing that coal was better and cheaper,” Antonopoulos said. In this period, where “nothing happened, a lot of the local industry collapsed,” he said.

During a five-year period when South Africa halted a program to acquire renewable energy for the grid, companies set up to make towers for wind turbines failed, and there is little local manufacturing capacity for solar panels.

“That cannot be reestablished from one day to another,” Antonopoulos said, adding that it will take two to three years before the wind and solar plants ordered by the government start to improve the power situation. “The current government is doing a lot. I am so happy that they have changed.”

Government-run auctions for the provision of renewable energy have restarted and have been increased in size. Ramaphosa has also changed regulations around the construction of power plants for private use, paving the way for mining and manufacturing companies to either build or commission their own capacity.

Related news – delays persist

The Department of Mineral Resources and Energy (DMRE) along with the Independent Power Producer Office (IPPO) is responsible for energy procurement in the country.

Mr Gwede Mantashe was appointed Minister of Mineral and Energy Resources in May 2019. That same year Mantashe was credited for promulgated the country’s Integrated Resource Plan (IRP) which seeks to procure 35348MW of a mix of generation technologies by 2030. The following year he gazetted a Sector 34 determination to procure 11813MW of power by 2022.

Related news: Ramaphosa misses the boat spectacularly in his sweeping energy reforms

Since Mantashe’s appointment, three energy procurement programmes have been implemented namely; the Risk Mitigation Independent Power Producer Programme (RMIPPPP) which seeks to procure 2000MW of new generation capacity (launched in September 2020), and the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Window 5 which seeks to procure 2500MW of new generation wind and solar capacity (launched in April 2021). A third procurement programme, REIPPPP Bid Window 6 which seeks to procure 2600MW of solar and wind capacity, was launched in April this year and updated to procure 4200MW.

In total, 8700MW is to be procured under the three programmes yet to date only 150MW ( 3 x 50MW projects) has reach financial close and is expected to feed electrons into the grid at the end of Q4 2023.

The reputational damage is evident in the response to Bid Window 6 where the numbers of bidders have dropped by around half compared to Bid Window 5. Read more

South Africa is in a massive energy crisis. Rotational load shedding is getting worst and the cost to the economy is a massive R950 million a day.According to a report presented by the University of Capetown, if 5GW of renewable energy was rolled out before 2021, the country would not be experiencing load-shedding. Read more

Lekela, which is in the process of being acquired by Africa Finance Corp. and Egypt’s Infinity Group, operates wind power plants with a capacity of 624 megawatts in South Africa. It plans to bid in future renewable energy auctions in the country, and also has facilities in Egypt, Senegal and Ghana.

Author: Bryan Groenendaal

Partial content source: Bloomberg

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