South Africa Launches Bidding Rounds for New Renewable Energy Projects

The country aims to procure 7,615MW of electricity from wind, solar, gas and battery storage by 2026.

by Motoni Olodun

South Africa is taking a major step towards a sustainable, clean-energy future by launching three bidding rounds for new renewable energy projects. The Department of Mineral Resources and Energy (DMRE) announced on Thursday that it had issued three requests for proposals (RFPs) for independent power producers to generate 7,615MW of electricity from renewable sources, natural gas, and battery storage.

The move is part of the government’s efforts to overcome the chronic power shortages that have plagued the country for years, causing frequent blackouts and crippling economic output. The state-owned utility Eskom, which provides most of the country’s electricity, has been struggling with aging coal-fired power plants, high debt, mismanagement, and corruption.

The DMRE said the three bidding rounds would help diversify the energy mix, reduce greenhouse gas emissions, create jobs, and attract investment. The RFPs are for:

  • 5,000MW of renewable energy, mainly from wind and solar photovoltaics (PV), with a minimum of 51% local ownership and participation.
  • 2,000MW of natural gas, which can be used as a flexible and reliable source of power to complement the intermittent nature of renewables.
  • 615MW of battery storage, which can store excess energy from renewables and release it when needed, enhancing grid stability and security.

The DMRE said it expected to announce the preferred bidders for the renewable energy and battery storage projects by the second quarter of 2024 and for the gas projects by the third quarter of 2024. The projects are expected to be operational by 2026.

The bidding rounds are part of the Integrated Resource Plan (IRP) 2019, which outlines the country’s energy roadmap until 2030. The IRP envisages a significant increase in the share of renewables, from 9% in 2020 to 36% in 2030, while reducing the reliance on coal, from 77% in 2020 to 59% in 2030.

The IRP also aims to procure 11,813MW of new generation capacity from various sources, including 6,800MW from renewables, 3,000MW from gas, 1,500MW from coal, and 513MW from battery storage. The DMRE has already procured 2,000MW from the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), which was launched in 2020 to address the immediate power supply gap.

The RMIPPPP attracted 28 bids, of which eight were selected as preferred bidders in March 2021. The preferred bidders include three gas-fired power ships, which have faced environmental opposition and legal challenges, as well as four solar PV projects and one wind project.

The DMRE said it was confident that the new bidding rounds would attract more interest and competition from local and international investors, as well as stimulate the development of the local renewable energy industry. The department said it was committed to ensuring a fair, transparent, and competitive procurement process, in line with the national development goals and the global climate agenda.

South Africa’s renewable energy sector has been hailed as one of the most successful in the world, attracting over $13 billion in private capital since 2011. The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has awarded contracts to 112 projects, of which 90 are operational, adding 6,180MW of capacity to the grid. The REIPPPP has also created over 50,000 jobs, supported rural development, and contributed to social and environmental benefits.

The new bidding rounds are expected to build on this success and accelerate the transition to a low-carbon, resilient, and inclusive energy system. South Africa has abundant renewable energy resources, especially wind and solar, which can provide cheap, clean, and sustainable power for its people and economy.

Source: Bizcommunity

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