The Development Bank of Southern Africa (DBSA), a state-owned development financier, is stepping up its efforts to facilitate the participation of black-owned entities and communities in the public procurement of 7,615 MW of new electricity generation and storage capacity. This move aligns with the country’s commitment to fostering inclusion and economic empowerment in the energy sector.
To date, the DBSA has invested R12.4-billion in various projects initiated since South Africa’s first independent power producer (IPP) auctions in 2011. Now, it aims to actively engage in the three bidding rounds launched in December. These rounds encompass 5,000 MW of renewable energy, 2,000 MW of gas to power (GtP), and 615 MW/2,460 MWh of battery storage.
Mathapelo Malao, Head of Energy, Environment, and Information and Communications Technology at DBSA, emphasised the bank’s readiness to provide infrastructure financing to IPPs and support broad-based black economic empowerment (BBBEE) investors. Additionally, the bank is keen to leverage the inaugural GtP bid window to enhance its gas finance pipeline.
Malao highlighted the significance of enabling BBBEE and local community trusts in fulfilling DBSA’s mandate to support economic transformation and ensure a just energy transition.
Apart from the ongoing procurement rounds, the Independent Power Producer (IPP) Office is preparing another set of requests for proposals, targeting an additional 5,000 MW of renewable energy, 616 MW of battery storage, and 1,000 MW of GtP. These proposals could be launched before the end of March.
Notably, the second GtP procurement round will focus on projects within the Coega Special Economic Zone in the Eastern Cape.
The decision to launch these three programmes stems from recent disappointing outcomes in public procurement, despite a significant supply-demand gap and worsening power outages. The coming months will witness close scrutiny of how both the government and bidders adapt to the grid constraints experienced during the sixth bid window of the renewables programme. During that window, none of the wind projects progressed to the preferred-bidder stage, following Eskom’s indication that the grid capacity had been allocated to projects with private power purchase agreements.
While initial expectations were that some capacity in several provinces could be released under a revised curtailment framework, the current seventh bid window does not account for such a revision. However, there has been a liberalisation of the existing curtailment system, allowing projects to receive compensation at the first curtailment event, rather than waiting for a 5% curtailment threshold to be reached.
Grid constraints have also influenced the inaugural GtP bid window, with a 1,000 MW cap imposed on the capacity near the Port of Richards Bay. The port is slated to become a future gas hub, and a preferred bidder was recently chosen for the development of a liquefied natural gas terminal.
Optimising grid usage has become a key consideration for the placement of new battery storage facilities, with the second bid window selecting eight substation sites in the North West province. In contrast, all five sites selected during the first window were in the grid-constrained Northern Cape.
Focusing on inclusivity and empowerment, the DBSA’s commitment to supporting black-owned firms and communities is poised to play a pivotal role in South Africa’s energy landscape, promoting sustainable growth and equitable access to opportunities.
