South Africa to procure 1.8 GW renewable projects in November

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South Africa to procure 1.8 GW renewable projects in November

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The Energy Minister of South Africa, Jeff Radebe, has announced that the fifth bidding round of the country's Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) will be launched in November 2018. The tender will procure up to 1.8 GW renewable capacity.

The Minister estimated that the tender could bring ZAR40 to 50 billion (US$3.2 to 4.0 billion) of investment to the country.

The tender will include provisions to enhance local manufacturing and provide opportunities for black industrialists and the development of black independent power producers. There will be specific reference and requirements for women-owned business participation and special opportunities for young people.

The REIPPPP has so far secured US$10.8 billion investment into the renewables sector since its launch in 2014.

Although, the implementation of the programme has not been smooth. Rounds 3.5 and 4 of the REIPPPP were held in April 2015, with 27 projects awarded power purchase agreements (PPAs) with public utility Eskom. The projects represent a total of ZAR56 billion (US$4.7 billion) of investment and over 2.3 GW of generation capacity to be added to the national grid over the next five years.

However, the PPA contracts were only signed two months ago - a two-year delay. The repeated rescheduling of the signings brought much frustration to the renewables industry and its proponents. Causes of delays included refusals by Eskom due to high prices and legal challenges by opponents of the procurement. Thus, some developers may be more wary than enthusiastic about this new bidding round.

On the other hand, the much-delayed signing does not seem to have jeopardised the future of the delayed projects. Scatec Solar announced the financial close of three solar projects awarded in the fourth bidding round only a week after the PPA contracts were signed. Building Energy also announced the financial close of a 147 MW wind farm procured through the REIPPPP less than a fortnight after the signing, as well as its intention to start construction of another REIPPPP project - a 4.7 MW hydropower project - this year.

In addition, at least three projects with a cumulative capacity of over 300 MW have been confirmed as proceeding with development since the signing.

The REIPPPP is driven by National Development Plan 2030, which envisages the installation of 20 GW of renewable energy by 2030.

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