Capacity hoarding under the renewable energy programme won’t be tolerated, warns IPP

Wind turbines on hills of the Roggeveld Wind Farm, situated on the border of the Northern and Western Cape provinces. Picture: Supplied

Wind turbines on hills of the Roggeveld Wind Farm, situated on the border of the Northern and Western Cape provinces. Picture: Supplied

Published Jan 18, 2024


Capacity hoarding under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) would not be tolerated, the Independent Power Producer Procurement (IPP) Office warned yesterday at a briefing for bidders under Bid Window 7.

It was one of three bidders’ conferences held by the Department of Mineral Resources and Energy yesterday and tomorrow.

The IPP office said it had recovered capacity awarded under Bid Windows 4, 5 and 6 from bidders who had failed to start off the projects.

The conference also heard that timelines for the completion of Bid Window 7 bids of the IPP programme were yet to be determined by the National Energy Regulator of SA (Nersa) and were awaiting approval of the curtailment process submitted by power utility Eskom last year.

Curtailment is the reduction of output of a renewable resource in response to system security needs or temporary transmission capacity constraint to below what it could have otherwise produced.

It is calculated by subtracting the energy that was actually produced from the amount of electricity forecast to be generated and is widely used by system operators as a cost-effective way to facilitate the introduction of renewable generators.

Eskom’s engineering manager, Seetsele Seetswane, said yesterday: “We are only waiting for approval of the gated approach by the regulator. The curtailment framework is completed.“

Eskom’s Gated Generator Connection Process (GGCP) proposes a shift from a one-on-one assessment of the connection requests to a clustered process, whereby aggregated grid adequacy and stability assessments will be made in batches.

The GGCP also envisages “rolling cycles of procurement” that alternate between the public and private off-taker programmes, with grid cost estimate letters to be specific to each programme.

IPP Office head Bernard Magoro said cost estimate letters, in particular, and budget quotes would be minimum requirements for bids, while the regulator mulled over the curtailment application.

Seetswane said under the the grid allocation rules, only projects at advanced state of readiness would be awarded capacity.

“There is some fruit we have recovered from the previous bid windows, which is capacity that had not been utilised. We have taken that capacity from Bid Windows 4, 5 and 6 back into the pool,“ he said.

Bid Window 7 aims to procure 5 gigawatts of power with onshore wind getting the larger share of the lot with 3.2GW capacity, while 1.8GW solar PV is allocated.

Winning projects needed to come online by 2025 in regions with grid availability, a report of which Eskom has prepared.

The delay of the launch and briefing from mid-2023 followed the partial failure of Bid Window 6 when no wind project advanced to preferred-bidder status after Eskom indicated that all grid connection capacity in the Eastern, Northern and Western Cape provinces had been absorbed.

The subsequent renewables round, along with the gas-to-power and second battery bid window, had since been delayed largely because of ongoing uncertainty over what grid capacity was still available and whether Eskom would implement curtailment to unlock capacity in the grid-constrained provinces.

IPP’s legal adviser, Louis Moyse, said issues around local content, which had been a hindrance to bidders in previous windows, were still to be addressed, though there were no designations at this stage on the amount of material to be sourced locally.

Bidders also expressed concerns about the bottlenecked approvals of the Environmental Impact Assessments by the Civil Aviation Authority (CAA), which had indicated it was understaffed.

“There will be no changes to the timelines that have been set, we need the additional capacity to feed onto the grid without further delays. The timelines are fixed“' Magoro said.

The three bid windows, released on December14, are in accordance with the ministerial determinations made under the 2019 Integrated Resource Plan (IRP2019), and call for procurement of the following:

- 5 000 MW of renewable energy under the seventh round of the (REIPPPP) Bid Window 7 (BW 7);

- 2 000MW from gas-to-power under the first round of the Gas IPP Procurement Programme (GASIPPPP BW 1); and

- 615MW from the second round of the Battery Energy Storage IPP Procurement Programme (BESIPPPP BW 2).