19 May 2015
The current load shedding incidents are receiving urgent attention with several steps being taken to address this, including the finalisation of the Integrated Energy Plan, says Energy Minister Tina Joemat-Pettersson.
“I want to reassure South Africans that the load shedding which prevails is receiving our highest priority for urgent resolution. Partnerships have been established between [the] government, labour, business and civil society to find solutions to our problems, in keeping with the great spirit of our country,” she said.
Delivering the Department of Energy’s budget vote this morning, the minister said the government’s urgent response to load shedding had accelerated the finalisation of the much-awaited Integrated Energy Plan.
“Once approved by [the] Cabinet, the Integrated Energy Plan will be published as a policy document. This plan will inform our future energy mix and prioritise policy interventions for future programmes within the energy sector,” she told Parliament.
Last month, the department announced a package of energy supply and demand options.
“This will increase the independent power producer [IPP] energy supply to the grid by means of renewable energy, coal, gas and co-generation by 17 000 megawatts [MW] towards the end of 2022. An annual increase of 2 400MW of additional energy capacity will be added to the grid. Our current circumstances compel us to add a significant amount of electricity generation to the grid in a very short time.”
She said the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) had added to the energy supply capacity and electricity diversity in South Africa over a period of only three-and-a-half years.
“Competitive energy prices have been achieved, with a distinct and meaningful possibility to make a real socio-economic difference in the communities where they are located.”
Since 2011, the department had procured 5 243MW of renewable electricity in bid windows 1 to 4 and connected 37 projects, with a capacity of 1 827MW, to the national grid.
On average, 15% of this energy was delivered to the power system during system peak periods, alleviating pressure on the power system.
“The energy contribution should grow to approximately 7 000 gigawatt hours per annum with the first 47 renewable energy independent power producers fully operational and producing at full capacity by mid-2016.”
Through the competitive procurement approach, the average per kilowatt hour tariff, in April 2014 terms, for onshore wind had declined by 55% to an average of 62c per unit and for solar photovoltaic by 76% to 79c per unit, Joemat-Pettersson said.
“This programme has secured a commitment of about R170-billion in capital investment to the South African economy. South Africans own an average of 48% in all [independent power producers], with black South Africans owning 28% of these projects.”
The department had already submitted for concurrence to the National Energy Regulator of South Africa new determinations for an additional 6 300MW for the REIPPPP, as well as 1 800MW for co-generation. Co-generation supply of about 720MW had been secured through Eskom.
“In addition, we have revised the approach in relation to the procurement of co- generation in line with the Integrated Resource Plan to assist with the current electricity challenges. The Request for Proposal for the revised co-generation approach, totalling 1 800MW is on track for release to the market.
“The announcement of the preferred bidders is expected in the third quarter of 2015. The new approach will ensure that the approval process is expedited and financial close accelerated.”
Request for proposals
The REIPPPP Request for Proposals for an additional 1 800MW from existing bid submissions was on course for release to the market by June 2015. This bidding process would be open to all unsuccessful bidders from all previous bid windows which were ready for re-submission.
Her department would also announce the appointment of additional preferred bidders from bid window 4 in early June.
Projects under this programme had started to spend on their socio-economic development and enterprise development commitments, said the department.
A spending pattern was unfolding, with most spending being allocated for education and skills development, health care, infrastructure, and social housing improvements, among others.
The department is engaged in the re-design of the IPP Request for Proposals, paying particular attention to early, efficient and equitable benefits to communities, as well as to a greater local content approach that will strengthen industrialisation in South Africa.
Additionally, the minister said that the Request for Proposals in relation to new coal-fired generation was released to the market in December 2014 with the bid submission initially scheduled for June 2015. Given ongoing engagement with the market and the need to ensure a successful procurement phase with firm results, this period would be extended by about two months to the end of August.
Preferred bidders for this programme would be announced before the end of the calendar year.