South Africa 2nd Round Renewable Energy Auction: 19 Awards Totaling 1.044 GW

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The South African government on May 21 awarded renewable energy contracts with a total capacity of 1,043.9 MW as it named the preferred bidders of a second-round Renewable Energy Independent Power Producers Program (REIPPP) auction. Nineteen project bids were accepted: 9 solar photovoltaic (PV) projects with a total 417.1 MW; 7 wind power projects totaling 562.5 MW; 2 small hydro projects totaling 14.3 MW; and 1 concentrating solar PV project of 50 MW.

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The South African government expects to award renewable energy contracts with a total maximum capacity of 3.725 gigawatts (GW) over the five-stage course of the Renewable Energy IPP Program. This week’s announcement of preferred project bidders is part of the second round of the SAR100 billion (~$12 billion) REIPPP.

Second-round auction bids to develop 79 renewable energy projects with a total 3.2 GW of capacity were submitted to South Africa’s Dept. of Energy to develop renewable energy projects in “Window 2” of the REIPPP, the bidding window for which closed March 5. While 51 met the RFP (Request for Proposals) criteria, only 19 were selected due to a cap on the electricity generation capacity to be awarded.

Renewable Energy Transition Key to Spurring Economy, Job Creation, Protecting the Environment

A lack of sufficient, reliable electricity generating capacity has been plaguing South Africa’s economy, while heavy reliance on coal to generate electricity brings all the financially unaccounted-for environmental and health costs and risks associated with coal-fired power plants. As a developing country, South Africa is one of the biggest emitters of carbon dioxide (CO2) and greenhouse gases (GHGs) in both absolute and per-capita terms. At the same time, high un- and under-employment continues to be a chronic social and economic problem.

South Africa is richly endowed when it comes to potential renewable energy resources, however. The SA government has come around to the view that encouraging, and actively supporting, a shift from fossil fuels to renewable energy resources can go a long way toward meeting its social, economic and environmental challenges. Encouragingly, that’s a viewpoint that developing economies around the world are coming round to, particularly as emerging market economies are the primary drivers underlying actual and forecast growing global fossil fuel demand.

The SA government’s Integrated Energy and Integrated Resource Plans lay out the overarching strategy for South Africa to start a transition to clean, renewable energy and address critical social, economic and environmental problems.

The Renewable Energy IPP Program is central to reaching SA’s renewable energy and IRP goals. The government has set targets of producing 10,000 GW-hours of electricity from renewable energy sources by 2013, and installing 17.8 GW of renewable power capacity by 2030, less than 10% of its forecast total.

In addition to avoiding the CO2 and GHG emissions, land, water pollution and environmental degradation associated with using fossil fuels to generate electricity, Renewable Energy IPP Program bids must meet mandatory local content provisions, which the government has included to motivate project developers to build renewable energy manufacturing facilities in the country. This, along with development and growth of downstream renewable energy businesses, such as installation and service providers, as well as ancillary service providers, is expected to provide a significant boost to job creation.

2nd Round Auction Puts SA Renewable Energy Plan on Firmer Track

Valued at more than SAR 28 billion (~$3.34 billion), the 19 renewable energy project developments awarded Monday are projected to result in the creation of nearly 7,400 jobs. Nearly SAR11.8 billion of the total SAR28.06 billion in renewable energy project value is to be of local content.

Some 1,165.9 MW of Renewable Energy IPP Program’s planned large-scale renewable energy project capacity remains unallocated. Breaking this out, 798.9 MW of a total 1,850 MW of onshore wind capacity, 256 MW of a total 1,450 MW of solar PV, and 60.7 MW out of a total 75 MW allocated for small hydro projects have yet to be awarded.

“Thus, completion of the Renewable Energy IPP bidding program is of paramount importance to the country,” the SA Dept. of Energy stated in its press release. “Through it we strive to utilize our plentiful natural resources productively in an environmentally friendly manner. Simultaneously we strive to meet the challenge of satisfying the growing demand for modern energy sources and access for all sectors of the population.”

South Africa’s Nedbank Capital is a partner in 39% of the 19 renewable energy projects slated for development as a result of the second-round REIPPP auction awards, according to a Creamer Media Engineering News report.

The latest Renewable Energy IPP Program awards “would go a long way towards easing any lingering doubts about the South African government’s commitment to its Integrated Resource Plan, which outlines the deployment of some 17 000 MW of renewable capacity by 2030,” Nedbank Capital’s infrastructure, energy and telecoms head Mike Peo was quoted as saying.

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