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Evaluation of short-term power bids being hamstrung by Covid-19, Eskom confirms

Evaluation of short-term power bids being hamstrung by Covid-19, Eskom confirms

14TH JULY 2020

BY: TERENCE CREAMER
CREAMER MEDIA EDITOR

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Progress on Eskom’s proposed Short-Term Power Purchase Programme (STPPP), initiated to help limit load-shedding while the State-owned utility implements a so-called reliability maintenance programme across its coal fleet over the coming 18 months, is being seriously retarded by South Africa’s Covid-19 lockdown.

The bidding deadline for the programme, which is led by Eskom’s GM for energy planning and market development, Callie Fabricius, was initially extended from April 30 to May 11. It was then further extended to July 2 at the request of the National Treasury.

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The extension also arose after Eskom received a slew of enquiries from potential bidders, which caused it to make changes to the initial contract timeframe, as well as the nature of the entities that were eligible to bid.

When the request for proposals was released on March 23, Eskom indicated that it would consider entering into power purchase agreements (PPAs) only with counterparties able to demonstrate that their facilities could meet a commercial operation date of no later than December 31, 2020.

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GM for risk and sustainability Andrew Etzinger tells Engineering News that, owing to the delays, Eskom will now enter into PPAs with facilities able to meet a commercial operation date on or before February 28, 2021.

Successful bidders would be entitled to sell energy to Eskom for a maximum period of 36 months, ending either 36 months from the start of commercial operation, or on February 28, 2024, at the latest.

The National Treasury has also insisted that Eskom should not exclude any potential suppliers from bidding, including renewable-energy independent power producers (IPPs) that currently supply electricity to the grid in line with Section 34 determinations, implemented under South Africa’s Electricity Regulation Act.

It is estimated that these IPPs could immediately inject an additional 128 MW of energy into the network. However, Eskom and the Department of Mineral Resources and Energy envisaged this energy being procured through the IPP Office, rather than under the STPPP.

Etzinger says it is possible that some renewable IPPs have now bid for STPPP contracts. He is unable to provide any insight into the nature or scale of the bids, however, as the evaluation process has not yet started.

In fact, he reports that the STPPP evaluation, along with several other tender evaluations, is being seriously hampered by the Covid-19 lockdown.

“We conduct these evaluations in a secure environment at Megawatt Park, known as C-Max. However, it has been difficult to use the C-Max facility as we normally do, because Eskom employees are either directly affected by Covid-19, or are being constrained from meeting as a result of the protocols instituted to limit the spread of the virus.”

Eskom is considering changes that will allow the evaluation to be done virtually.

Etzinger expressed frustration at the delay, particularly given the return of load-shedding in July, owing to a combination of plant being offline for reliability maintenance, or as a result of unplanned trips.

In early May, Eskom CEO Andre de Ruyter indicated that the utility saw scope to procure about 129 MW under the STPPP and also reported that the utility was working on demand- and supply-side procurement solutions that could collectively deliver 917 MW by March 2021.

All these initiatives were currently being hamstrung by the Covid-19 lockdown, however. 

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