In an address given on 29 October 2012, the Minister of Energy Ms Dipou Peters announced that the financial close for window one of the REIPPPP will go forward on 5 November 2012.
The projects under Window One amount to R47billion of investment in power generation. This investment will create job opportunities for a number of South Africans especially in rural areas where these renewable power plants are located. These commitments are all covered by the implementation agreements which will be signed by the department and the bidders on the 5th of November 2012.
The 28 participants in Window one will each have a 20 minute time allocation to sign with the Department and Eskom. The 5th and 6th of November have been set aside to accommodate this. “The Department will be signing the Implementation Agreement and the Direct Agreement with each preferred bidder, whilst Eskom will be signing the Power Purchase Agreement”.
Three additions have been made to the original REIPPPP and have been approved by NERSA. These determinations include the following:
The 1stDetermination is on base load with:
- 2 500 MW of energy from coal in the system between 2012 and 2024
- 2 652 MW of gas power in the system between 2021 and 2025
- 2 609 MW of hydro power including regional projects and must be in the system between 2022 and 2024
The 2nd Determination is on renewable with 3 200 MW of power – which include CSP, Solar PV, Biomass, Biogas, Landfill Gas, and Hydro between 2017 and 2020.
The 3rd Determination is on the Medium Term Risk Mitigation Plan with:
800 MW from cogeneration to be on the system as soon as possible
474 MW from natural gas between 2019 and 2020
Despite severe delays to the Renewable Energy Independent Power Producer Programme (REIPPP), the inclusion of CSP projects on the list of those approved for loans by the DBSA is seen as significant progress by many experts in the industry. Two projects under development in South Africa are Abengoa’s 50MW Khi Solar One and 100MW KaXu Solar One plants, both of which were approved loans by the DBSA, and consequently have taken important steps to meet their terms under the REIPPP to be up and running by mid-2015.
However, despite this positive news for the South African CSP industry there still remains a lack of clarity on the tender CSP will be awarded in Round III of the REIPPP. Currently, the Round III bid submission date has been pushed back over 8 months, originally scheduled for 20 August 2012 and now expected to take place in early May 2013. The major challenge in this region remains long-term market certainty, with developers, investors and manufacturers reluctant to commit more resources into South Africa until the government provides a clearer picture on how many MW’s will be available in later rounds.
The impact of delays on investor confidence is undoubtedly the biggest concern for the industry. In addition with the recent announcement from the Department of Energy that 3200MW will be added to the REIPPP, CSP will need to attract further investment to see an increased share of the emerging renewable energy market in South Africa.
To combat this uncertainty surrounding the future financing of projects, CSP Today have announced this week that the Industrial Development Corporation, Export-Import Bank of the United States, NedBank, Standard Bank and Investec will participate at CSP Today South Africa 2013 (4-5 February, Pretoria). The risks associated with CSP technologies in South Africa and the challenges faced to secure project finance ahead of Phase III will form a critical part of the discussions. In addition leading developers and regulators will identify what initiatives must be taken to maintain financial backing for CSP, to create a roadmap to sustain market growth.
In a recent interview, event organizer Jack Ahearne said that “with a cloud of uncertainty surrounding future rounds of the REIPPP, it is crucial that the industry unites to address how Phase I and II has impacted future CSP growth, to create a viable roadmap to sustain development in South Africa”.
The event is set to take place on 4-5 February in Pretoria, with over 250 leading stakeholders in attendance. For more details about the summit go to the website: www.csptoday.com/southafrica
