The acting head of the Independent Power Producer Office (IPPO), Advocate Sandra Coetzee, has indicated that there should be “no surprises” in the bid documentation that will be released once procurement activities resume again, following a hiatus of nearly five years.

Coetzee, who stepped into the role in late July following the departure of Karen Breytenbach, tells Engineering News Online it is premature to offer detailed insight into the changes being considered. She confirms, however, that these adjustments will be guided by the principles of greater inclusivity and transformation, as well as affordability.

“With regard to procurement design, the team has done a considerable amount of work that is putting us in a good position for procurement as soon as determinations are in place after promulgation of the IRP.  We are actively engaging with our colleagues at the Department of Mineral Resources and Energy (DMRE) in this process."

The IPPO also intends having an “extensive” series of stakeholder engagements ahead of the release of the documentation to ensure the bankability of programmes and that they remain attractive to potential independent power producer (IPP) investors. These engagements will be initiated once the Integrated Resource Plan (IRP) is published.

“The roll-out of the programme will continue to build on the strong foundations of the past nine years,” Coetzee insists, describing those foundations as being a predictable regulatory framework, as well as proving investors with the certainty of lawful and compliant procurement.

Through the IPPO’s flagship Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) 6 323 MW of mostly solar and wind capacity has been procured since 2011 across 92 separate projects, spurring about R200-billion in investment.

Coetzee’s immediate priority is to ensure that the IPPO is ready to implement any procurement programmes that will arise once the IRP is promulgated and the Ministerial determinations are published. With the energy sector being in crisis, the role of a capable and ready IPPO is important to attract urgently needed investment in generation capacity in South Africa.

Coetzee has deep knowledge and rich experience in infrastructure development in South Africa and across the continent. She also has senior management experience in government and the public sector having previously worked at the Department of Public Enterprises and South African Airways.

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Energy Minister Jeff Radebe says government has no intention of renegotiating the power purchase agreements (PPAs) for renewable-energy projects procured in 2011 and 2012, but has left the door open for a “refinancing” of the projects in the interest of lowering the cost of the plants to the consumer.

The prospect of renegotiating the contracts had been raised by Public Enterprises Minister Pravin Gordhan during a recent Parliamentary Portfolio Committee meeting in Cape Town.

Gordhan was quoted as saying that a renegotiation of the PPAs associated with the first two bid windows of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) would “alleviate pressure on Eskom and the electricity tariff”.

However, Radebe said that, while the tariffs bid during the first rounds were indeed high; there had been a steady decline in subsequent auctions. In addition, the PPA contracts had been signed after a "very fair, very competitive and very transparent" process.
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​Government would be open, though, to approaches from the IPPs themselves should they have refinancing proposals that could result in a lowering of the costs. "We will cross that bridge when we get to it," the Minister said.

One proposal is to allow for a possible ten-year PPA term extension, which would create additional value for the IPPs that could be paid for by lowering the current tariff.

Briefing the media in Pretoria on Sunday amid attacks on the IPP programme, which has been singled out by some stakeholders as posing a major financial risk to Eskom, Radebe mounted a robust defence of the REIPPPP. He noted that the programme had not only attracted R209-billion in investment over the past eight years, but had also been lauded internationally.

"While I acknowledge the programme is not perfect and can be improved in specific areas, why do we not embrace a programme that has done so much for the country and has received international acknowledgement?"

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Solar energy equipment supplier juwi Renewable Energies has concluded three engineering, procurement and construction (EPC) and operation and maintenance (O&M) contracts, with a combined value of R3-billion, with African Infrastructure Investment Managers (AIIM), which will deliver 250 MW of additional solar photovoltaic (PV) electricity to South Africa’s power grid over the coming few years.

The agreements follow in the wake of Energy Minister Jeff Radebe’s announcement in April of the signing of power purchase agreements with the 27 independent power producer projects contracted under Round 4 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The R56-billion worth of projects will add 2 300 MW of renewable energy capacity to the national grid over the next five years.

Juwi has been contracted to build the 86 MW Waterloo Solar Park, situated near Vryburg, in the North West; the 78 MW Bokamoso Solar Park, situated near Leeudoringstad, in the North West; and the 86 MW Droogfontein 2 Solar Park, situated near Kimberley, in the Northern Cape.

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According to Dominic Wills, CEO of SOLA Future Energy, small power developers that invested in securing contracts in the government's renewable energy procurement programme are in the dark about when their agreements will be finalised.

He says several local companies have been forced to retrench staff because of the financial impact of the delay in concluding the contracts for “small projects”.

The department launched the Small Projects IPP Procurement Programme (SPP) in 2014, favouring locally owned companies with a sharp focus on BBBEE and local procurement. “Although the projects were awarded in 2015 following a competitive process, what followed was a series of missed deadlines,” he explains.

'Stagnant projects and no answers'

The programme, aimed at emerging small power developers on projects with less than 5MW of capacity, was intended to give manufacturers and engineering procurement and construction companies (EPC) who do not yet have international certification, the opportunity to supply equipment and services for the projects.

“To date, they’ve been left with stagnant projects and no answers,” Wills explains.

He says this situation demonstrates the importance of government oversight and follow-through to prevent projects from falling by the wayside.

“Many small-scale developers are trying to build a successful track record that will allow them to secure contracts,” says Wills. “These projects would have enabled them to do so. One cannot build in this industry without a track record.”

Wills says the recent successful conclusion of 27 power purchase agreements has shown what can be achieved when government and private companies engage. Energy minister Jeff Radebe recently announced that companies will have a fresh opportunity to supply the national grid with electricity when the next bid window of the Renewable Energy Independent Power Producer Procurement Programme opens in November.

“Similar engagement is needed to conclude the Small Projects IPP,” Wills concludes.

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The new bid documentation being prepared by the Department of Energy (DoE) for future independent power producer (IPP) procurement rounds will have to strike a delicate balance between sustaining investor interest and responding to society’s demand for increased socioeconomic benefits.

In fact, Allen & Overy partner Jason van der Poel, who advised government when South Africa initiated its IPP bidding programmes in 2011 and who currently advises developers and lenders, believes the DoE should take care not to “entirely reinvent the wheel” when introducing the new co-benefit clauses.

The first test of whether such a balance has indeed been struck is likely to arise during the fifth bid window of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) due in November.

Energy Minister Jeff Radebe has already announced that around 1 800 MW of renewables capacity will be procured during the auction, which is expected to supplant the so-called ‘Expedited Bid Window’, initiated in 2015, but never finalised.

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South Africa’s five largest renewable energy projects, measured in terms of investment, are all multi-billion rand wind farms that contribute a collective 645.71 megawatt (MW) to the grid. 
Together, SA's renewable energy projects contribute 3,773 MW, compared to the 43,485MW currently delivered by fossil fuels. This is according to information released by the the Independent Power Producer Procurement Programme to Parliament in March.

The existing investment in South Africa's sustainable energy projects totals R142 billion, almost five times what SA paid for the 2010 FIFA World Cup.

And government this week signed contracts worth an additional R56bn, expected to add 2,300 MW of electricity to the national grid over the next five years, with 27 independent renewable energy power producers.

The average time for construction to completion of renewable energy projects is 1.9 years. 

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JOHANNESBURG (Reuters) - South Africa signed long-delayed renewable energy contracts worth $4.7 billion with independent power producers on Wednesday, in the first major investment deal under President Cyril Ramaphosa.

The signing of power purchase agreements for the 27 mostly solar and wind projects was held up for over two years under ousted president Jacob Zuma, who favored a plan to build additional nuclear power plants.

It was also the subject of a last-minute legal challenge by the NUMSA labor union and Transform RSA lobby group, but a court rejected their application for an urgent interdict last week.

The signing represents a victory for Ramaphosa, who has promised to unlock investment and kick-start economic growth since replacing scandal-plagued Zuma in February.

“This will bring much-needed policy and regulatory certainty and maintain South Africa’s position as an energy investment destination of choice,” the energy ministry said in a statement.

Ramaphosa, a wealthy businessman, has prioritized revamping the economy and turning around struggling state-owned enterprises like utility Eskom, which will purchase power from independent producers as part of the deals agreed on Wednesday.

Opponents of the renewable contracts argued that Eskom could not afford the additional financial burden and that they would lead to job losses in the coal sector.

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March 8 (Renewables Now)
South Africa's energy minister Jeff Radebe announced on Thursday that the 27 delayed renewable energy power purchase agreements (PPAs) will be signed on March 13.    
The project agreements of the 27 renewable energy independent power producer projects (REIPPP), including the PPAs with grid operator Eskom, will be signed on Tuesday next week, Radebe said. 

The minister acknowledged that the "milestone" comes after a long period of uncertainty. The signing will occur with the full support of the president and the ministers of finance and public enterprises, as well as Eskom, according to the announcement.

Brenda Martin, chief executive of the South African Wind Energy Association (SAWEA), said the industry is "immensely relieved to receive confirmation" on the matter.

"SAWEA and all its members look forward to resuming a focus on realising the great contribution that wind and renewable power can make to South Africa's social, environmental and economic development," Martin also said.

Eskom in 2016 refused to enter into new deals with 27 independent power producers (IPPs) due to cost issues and excess power generation capacity, causing significant delays in the development of the projects, selected under bid windows 3.5, 4 and 4.5 of the country's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The 27 projects include wind, solar photovoltaic (PV) and concentrated solar power (CSP) technologies. 

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By Admire Moyo, ITWeb's business editor.
Johannesburg, 15 Sep 2017

The South African Wind Energy Association (SAWEA) has lambasted the power utility and the National Energy Regulator (NERSA) over lack of transparency.
Eskom and NERSA yesterday postponed SAWEA's bid to have the utility investigated over its "continued unwillingness to fulfil its mandate as purchaser of power duly procured by the Department of Energy".

Yesterday, Eskom asked NERSA for a 19.9% tariff hike for 2018/19. In a statement issued yesterday, Eskom said it welcomes NERSA's approval of the consultation process for Eskom's 2018/19 revenue application.
Constitutional principles
SAWEA and its legal counsel have strongly objected to both Eskom's lack of engagement and the national regulator's refusal to open yesterday's hearing to the public, which is inconsistent with SA's constitutional principles of openness, transparency and fairness, as well as NERSA's own legislation, the wind body says.
It points out SAWEA declared a power procurement dispute in October 2016, requesting the regulator to undertake an investigation into Eskom's continued unwillingness to fulfil its mandate as purchaser of power duly procured by the Department of Energy.

In March 2017, the national regulator responded to this complaint by launching a formal investigation into Eskom's conduct. A hearing for both parties to make submissions was scheduled for 14 September.
However, SAWEA says the hearing began on two disappointing notes: firstly, Eskom arrived with a plea for postponement, citing "communications challenges" that had prevented the utility from adequately preparing its submissions, both written and verbal, despite several correspondences between NERSA and the parties, clearly indicating the timeframes to be adhered to.
Secondly, NERSA had declared the hearing closed to the public, and would not allow members of media who had arrived, to join the hearing, the organisation charges.

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