Renewable energy procurement programme notches up successes despite delays
ENGINEERING NEWS / 07 MARCH 2018 - 13.55 / KIM CLOETE
A recent report has shown that 112 projects have been procured through the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), with 62 of those having started commercial operations by December 31, 2017.
The total infrastructure investment from 64 signed projects totals R142-billion, says the report that was compiled by the Development Bank of Southern Africa, the Independent Power Producers Office, the Department of Energy and the National Treasury.
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The report, which was presented to Parliament’s Portfolio Committee on Energy this week, highlighted the achievements of the programme so far, noting that a highly competitive bidding process had led to South Africa getting the benefit of renewable energy at some of the lowest tariffs in the world.
The estimated average portfolio cost for all technologies under the REIPPPP has dropped consistently in every bid period to a combined average of 86c/kWh in bid window four.
By December, 3 773 MW of renewable energy capacity had been installed – an equivalent of 66% of the capacity of the Medupi power station, and 19.8% of the energy output that Medupi will provide once completed, the report said.
Construction for each of the 62 renewable energy projects has taken an average of 1.9 years.
The 27 projects for which outstanding power purchase agreements (PPAs) are soon to be signed will provide a further 2 305 MW of capacity.
Alongside the successes, the report also noted some serious consequences of the delays in signing the most recent PPAs and uncertainty around the future of the REIPPPP. It said that at least 14 manufacturing companies had closed down and had decided to withdraw from South Africa or put their investments on hold as a result of the delay in signing the PPAs.
Industry training schemes have also been put on ice.
The renewable energy programme so far has created many jobs. Direct employment creation had been created for 34 841 people, with most of them created during the construction phase and 4 667 in the operational phases of the projects.
Black South Africans own, on average, 31% of the shareholding in the projects which have received financial close, while a large slice – nearly 40% – of the project revenue set aside for economic and socioeconomic benefits to communities had been spent on education and skills and development, with another 25% going to enterprise development.
The renewable energy projects are spread throughout South Africa. The Northern Cape is home to the lion’s share of the projects, at 59, mainly solar and wind, based in the province. Another 17 are in the Eastern Cape, with 14 in the Western Cape.
The long-awaited signing of the 27 projects under REIPPPP bid windows 3.5 and 4 would create 58 419 full-time equivalent jobs for South Africans, mostly during the construction period, the report said. Although most jobs are created during the construction period, the anticipated rolling procurement programme was designed to ensure that there is ongoing job creation.
The planned gas-to-power IPP programme will deliver about 50 000, economy-wide, full-time equivalent job opportunities over the next 25 years, said the report.
Meanwhile, the 2 500 MW coal baseload IPP programme had procured 863 MW of coal in the first bid window. The IPP Office was negotiating with preferred bidders on the introduction of cleaner coal technologies, while a cross-border coal programme was also being developed.
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