Industry news
Successful new-coal IPP bidders announced
Minister of Energy Tina Joematt-Pettersson today announced the successful bidders for the first coal-based independent power producer (IPP) programme.
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In 2010, the SA government adopted a plan to grow the share of renewable energy in the electricity mix from zero to 21% over the 20 year planning horizon to 2030, while simultaneously reducing the capacity share of fossil fuels in the electricity mix from 86,5% to 57%.
Joematt-Pettersson said that as at the end of June 2016, 6376 MW of electricity has been procured from 102 IPPs in six bid rounds. Of this, 2200 MW of electrical generation capacity from 44 IPP projects has been connected to the national grid.
Launched in December 2014, the coal programme is the first baseload programme which allows the private sector to generate energy using coal resources. This programme is rolled out through two bid windows.
The preferred bidders of the first bid window coal baseload programme are Thabametsi and Khanyisa.
Click here for more information on Thabametsi IPP
Click here for more information on Khanyisa IPP
The bidders will collectively add 863 MW to the country's grid in the next five years, and are set to begin commercial operation in December 2020.
The minister said that the Thabametsi and Khanyisa IPPs had submitted prices well below the stipulated qualification price of 82c/kWh.
All components of the tariff other than coal will escalate with CPI, while the coal component of the tariff will escalate with reference to a basket of published indexes, currently CPI plus 1%.
The IPPs are not able to seek adjustment of the tariff (outside of the agreed escalation) for cost overruns or delays during the construction period, and for ongoing operating cost overruns, including the cost of coal, limestone and water charges over the life of the PPA, because coal and limestone supply agreements are between the seller and its suppliers.
The minister said that Eskom, the buyer, will have no exposure to ongoing mine operating costs including residual environmental risks arising from mining operations. Significant penalties will be levied for not timeously achieving scheduled commercial operation (i.e. six days penalty for one day late connection) she warned.
The IPPs are required to have a minimum South African entity participation of 51%, black ownership of 30%, and a weighted B-BBEE contributor status of level five in respect of locally based shareholders.
The projects will raise R40,1-billion of debt and equity funding, and will bring some 6600 construction jobs and 13 500 operations jobs in surrounding communities.
The minister also emphasised that while South Africa's energy build plan still incorporates the development of fossil fuel assets in the foreseeable future, the department is committed to transition to a low-carbon economy, with priority to be given to clean energy alternatives... (more)
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