South Africa’s REIPPPP Round 6 RFP Delayed Again – 2000MW Risk Mitigation Power Projects Financial Close Delayed Again

  • According to South Africa’s Department of Mineral Resources and Energy (DMRE) IPP Projects website, the request for proposals (RFP) for 2600MW REIPPPP Bid Window 6, is expected to be launched towards the end of March 2022 after first announcing a target date of 28th September 2021. Read more 
  • According to the same DMRE website, the country’s 2000MW Risk Mitigation Independent Power Producer (IPP) Procurement Programme deadline for financial close is today.
  • Neither deadline has been achieved marking a pattern of failed deadlines in each programme. 
  • The country desperately needs new generation capacity to come online – Eskom currently has a capacity deficit of 4000MW and the country is vulnerabe to regular bouts of load-shedding.

According to global news agency, Bloomberg, the signing of power purchase agreements by preferred bidders for the 2,000 megawatt risk mitigation, or emergency power, program was postponed due to “outstanding matters and conditions” with state-owned electricity utility Eskom Holdings SOC Ltd., the Department of Mineral Resources and 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.

The two programme delays means that the country’s plan to add over 4600MW of much needed private power generation has been further delayed. This also means that desperately needed jobs are not created in the economy which is currently experiencing a record unemployment rate of 35.3%.

No press release or comment has been forth coming from the country’s IPP office. South Africa’s beleaguered energy minister, Mr Gwede Mantashe, confirmed earlier this month that REIPPPP Bid Window Round 6 will open at the end of this month (March). Read more

Related news: Has South Africa’s REIPPPP Bid Window 6 Been Delayed Over Round 5 Outcome Controversy?

Bid Window 5 financial close also expected to be delayed – projects are not bankable

REIPPPP Bid Window 5 project winners are expected to reach financial close at the end of April 2022 (next month) but there much speculation that they are struggling to reach financial close. Bid Window 5 yielded the lowest tariffs in any bid window thus far. The average weighted price bid for solar comes in at (R) 42.9c kW/h while the average bid for wind is (R) 49.5c kW/h. Industry experts claim that the winning tariffs are too low to be realistic. Read more 

Bloomberg also cites low tariffs as the reason why projects are struggling to reach financial close. Read more 

South Africa’s bid window 5 was massively oversubscribed with shovel ready solar and wind projects. There were a total of 63 solar PV projects and 39 wind projects submitted. The outcome has left a lot of losing IPP’s scratching their heads over the exceptionally low tariffs and questioning the DMRE’s criteria for project selection, in particular when it comes to B-BBEE requirements.

It is alleged that the same broad based black economic empowerment (B-BBEE) company, H1 Holdings, is an equity partner in no less than 21 of the 25 projects – Mainstream Renewable Power (12 projects)Scatec (3 projects),EDF (3 projects) and local IPP Red Rocket (3 projects).   

The DMRE has outlined a three year horizon for the various energy procurement programmes the department has implemented under the country’ Integrated Resource Plan 2019 (IRP 2019) and the Risk Mitigation Independent Power Producer Procurement Programme. A total of 14400MW wind power capacity plus 6000MW of solar PV technology is allocated for procurement leading up to 2030 in the IRP 2019

Author: Bryan Groenendaal

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