Solar Wins South Africa’s REIPPPP 7 Renewable Energy Auction
Source：taiyangnews
Here’s the list of preferred bidders for South Africa’s REIPPPP 7 auction round. (Photo Credit: Republic of South Africa)
Key Takeaways
South Africa has selected 8 projects as the preferred bidders for 1.76 GW of solar PV capacity under the REIPPPP BW7 auction
Winning bids ranged from ZAR 420.74/MWh to ZAR 492.20/MWh with Pele Green Energy securing the largest chunk
Another 932.4 MW onshore wind capacity is under negotiations to be included in the preferred bidders list subject to value for money
Since the winning capacity of 1.76 GW is way below the 5 GW on offer for this round, the government plans to re-allocate some onshore wind capacity to eligible solar PV projects
Solar PV has swept South Africa’s Renewable Energy Independent Power Producers Programme (REIPPPP) bid window 7 (BW7) as this technology won the entire 1.76 GW awarded by the government to preferred bidders. Winners secure 20-year supply contracts. Commercial close for these projects is expected in H2 2025.
Notably, onshore wind, which was originally allocated 3.2 GW of the 5 GW tender, failed to win any capacity making it the 2nd consecutive round when solar was the sole winner. The allocated capacity of 1.8 GW for solar PV was also not entirely exhausted (see South Africa Launches REIPPPP Bid Window 7).
The Department of Electricity and Energy said it has also selected 4 compliant onshore wind projects with a total of 932.4 MW capacity as ‘eligible bidders’ who can be appointed as preferred bidders for this round ‘subject to value for money negotiations and governance approvals.’ This shows that the prices for onshore wind were found to be higher than those of solar PV.
Additionally, it has also approved the option to re-allocate capacity from onshore wind to solar PV technology which should increase the awarded capacity as more eligible bidders are added to the category of preferred bidders.
Nevertheless, the 5 GW auction round was oversubscribed with 10.2 GW worth of bid responses received as 40 for solar PV and 8 from onshore wind projects. An independent evaluation later, 30 solar PV and 4 onshore wind projects submitted their proposals out of which only 1.76 GW was selected finally, all representing solar PV capacity.
The largest winner of this round is Pele Green Energy as it won 6 projects out of the 8 awarded. Winning prices ranged from ZAR 420.74 ($22.71)/MWh for a 240 MW solar power plant to ZAR 492.20 ($26.56)/MWh for a 190 MW project.
Winning projects are located in the provinces of Mpumalanga, Limpopo, Free State, and North West. All of these winning projects represent total investments worth ZAR 31.4 billion ($1.7 billion) and will create 6,971 jobs for the locals. As per the terms of the auction, these projects will allocate 38.8% of their total project costs to local content which will represent around ZAR 7.8 billion ($421 million) during construction and ZAR 2.4 billion ($129.5 million) during the operation and maintenance phases.
Speaking to local media, South Africa’s Minister of Electricity and Energy Kgosientsho Ramokgopa blamed grid capacity as the limiting factor for the country’s renewable energy ambition. ESI Africa quoted him as saying that though there is huge appetite by the private sector to participate, grid has become a binding concern which will undermine the country from benefiting from these renewable energy resources.
The department has also released the list of 8 preferred bidders for the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP) bid window 2 (BW2), selecting 615 MW of capacity. This will provide capacity, energy, and ancillary services to the national utility Eskom at 8 specific sites.
Winning projects were found to be highly competitive compared to BW1 for BESIPPPP, representing a 35% decrease in the average evaluation price.
These projects are part of the country’s efforts to diversify its power generation capacity from fossil fuels and become energy-independent. Under the ministerial determination of January 2023, South Africa had announced plans to procure 14.77 GW of new wind, solar and battery storage capacity (see South Africa To Launch Tenders For Around 15 GW RE Capacity).