Minerals Resources and Energy Minister Gwede Mantashe
The Department of Mineral Resources and Energy (DMRE) has formally initiated the much-anticipated procurement process for 2 000 MW of emergency power under its so-called Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).
The request for proposals (RFP) bid documentation was available online from August 23 and the bid submission deadline was scheduled for November 24. Preferred bidders should be announced on December 15 and financial close for selected projects was anticipated by April 30, 2021.
The documentation would be released only to prospective bidders that completed an electronic registration form and paid a nonrefundable fee of R25 000 for each prospective project.
The DMRE would also host a bidders conference prior to the bid submission date. The conference would be held on a “virtual teleconferencing platform” and the date of the conference would be publicised later.
The DMRE said it expected that the procurement process would attract investments of about R40-billion and indicated that projects procured under the RMIPPPP were expected to be fully operational by no later than the end of June 2022.
The department said the RMIPPPP was being launched in response to a short-term electricity supply gap as identified in the Integrated Resource Plan of 2019 (IRP 2019).
“The programme seeks to procure 2 000 MW from a range of energy sources and technologies. Proposed technical solutions will have to be dispatchable and be able to provide a range of support services to the grid system operator,” the DMRE said.
The RFP, the department added, had been designed to support broad-based black economic empowerment initiatives, including ownership and localisation.
“Bidders will have to make commitments in terms of job creation, socioeconomic development, supplier and enterprise development and skills development. Stringent local-content thresholds and targets have been introduced that should provide impetus to the local construction and manufacturing sectors.”
The RMIPPPP has been limited to the 2 000 MW shortfall that the IRP 2019 indicated would persist between 2019 and 2022.
The IRP 2019 was issued before Eskom resumed load-shedding on a regular basis towards the end of last year, as well as before the utility took the unprecedented step on December 9 of declaring Stage 6 load-shedding, during which 6 000 MW of rotational cuts were performed to ensure that the power system did not collapse.
In the days that followed the implementation of Stage 6, Eskom indicated that the short-term supply gap could be as large as 5 000 MW, and the utility indicated that load-shedding would remain a threat until it had been able to implement a reliability maintenance programme across its unreliable coal fleet.
Eskom estimated that it would take about 18 months to implement such a maintenance programme.
The Ministerial determination for the RMIPPPP, which was Gazetted on July 7 after the National Energy Regulator of South Africa (Nersa) provided its concurrence, was one of two determinations sent to Nersa by Minerals Resources and Energy Minister Gwede Mantashe in late February.
It is understood that Nersa, which initially planned to conduct public hearings on the second determination, had recently concurred with the document. Nevertheless, the Ministerial determination had not yet been Gazetted.
In June, the head of South Africa’s Independent Power Producer Office, Tshifhiwa Magoro, indicated that the next bidding round for the procurement of utility scale renewable-energy projects, often referred to as Bid Window 5, would be launched only in the second quarter of 2021.
In a recent publication, the Council for Scientific and Industrial Research (CSIR) noted that even the emergency procurement process would not help close the prevailing supply/demand gap in the short-term, as none of the technologies being considered could be implemented until 2022.
The science council argued that “customer response at scale” was required to make an immediate impact on reducing the risk of load-shedding, which was already worse in 2020 than had been the case in 2019, despite a big slump in demand at the start of the Covid-19 lockdown in March and April.
The CSIR argued that the prevailing regulatory constraints to self-generation by businesses, municipalities and households should be addressed with urgency and that power purchase agreements with existing wind and solar farms be renegotiated to mop up any excess supply that was available.