Publish Date : 31-Mar-2016
South Africa launched in July 2015 round 4.5 of its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), to procure an additional 1.8 GW of renewable energy capacity.
The expedited tender round was five-times oversubscribed with submissions totalling 9.5 GW, Minister of Energy Tina Joemat-Pettersson said in a speech on March 17. Around 6.5 GW of this capacity was for renewable energy projects in the Northern Cape province.
Some 450 MW of the capacity is to be allocated to CSP projects and seven CSP projects were bid, one industry source told CSP Today. The results of the tender are expected in the coming months.
While minister Joemat-Pettersson also reaffirmed the governments plans to build a 1.5 GW solar power park in the Northern Cape, she said most of the 3.2 GW network capacity between provinces Karoo and Namaqualand areas has already been allocated and future projects may have to make grid investments of their own. All of the CSP projects allocated so far have been situated in the Northern Cape.
Until more funds are made available for transmission projects, development costs and relevant capital costs to connect IPPs, private investment in the grid remains an option to address the funding and implementation constraints experienced, the minister said.
Since South Africa launched its REIPPPP in 2011, interest from developers has been high and renewable energy prices have fallen sharply.
Although CSP prices have not dropped as fast as those of PV, the base rate prices for CSP projects have halved, from 3.35 rand per kWh (21.9 cents/kWh) in 2011, to 1.70 rand/kWh in 2015. The REIPPPP also provides a peak rate tariff for CSP plants which offers 270% of the base rate across the evening peak demand period, to incentivize Thermal Energy Storage (TES) systems.
US developer SolarReserve bid for three of the seven CSP projects in the latest expedited tender round: Rooipunt and Kotulu Tsatsi in the Northern Cape, and Kalkaar in the Free State province. The projects, each with a 150 MW capacity, were jointly bid with French utility Engie and would employ the same technology used in the Crescent Dunes plant in Nevada, U.S.
These three projects are all fully permitted. We also co-bid for three PV projects with NRG. Altogether, those six projects were in excess of $3 billion of investment that we put together for bidding round 4.5, Kevin Smith, CEO of SolarReserve, told CSP Today.
We also have multiple South African partners; 40% of the equity is going to come from South Africa and the balance will come from SolarReserve and Engie, he added.
US developer BrightSource Energy also reportedly bid in the latest round, proposing to build the 150 MW Solis I solar tower in the Van Roois Vley site, Northern Cape.
Saudi Arabias ACWA Power said March 15 it has bid to build a 150 MW CSP plant in the Northern Cape.
South Africas government aims to procure 13.2 GW of renewable energy by 2025, and aims to build 1.2 GW of CSP capacity. Around half of this CSP capacity was allocated before the latest tender round.
In her speech on March 17, the energy minister said a Ministerial Determination has been granted for the procurement of 1.5 GW through a solar park to be developed in the Northern Cape Province, confirming an earlier government pledge.
The minister noted the Northern Cape has seen vast interest for further solar investment, and enjoys sufficiently high solar irradiation levels to support investments in the park. But she also noted that required strengthening of the Northern Cape grid network has not been budgeted for in the current regulated multiyear price determination (MYPD3) for 2017/18 electricity tariffs.
The Northern Cape offers some of the best conditions in the world for solar electricity generation, and therefore it is not surprising that the province hosts 100% of the CSP and 65% of the solar PV capacity procured in bid windows to date in the REIPPPP in South Africa, contributing 72.5% or 2 112MW of the total 2 992MW solar power in the country, the energy minister said.
The predicted rapid expansion of South African renewable capacity will require significant reinforcement of the grid network to accommodate new renewable generation capacity, according to an analysis paper written by advisors to the governments IPP Office and state power utility Eskom.
Eskoms ability to invest in power plants and grid infrastructure is deeply tied to South Africas national finances, which have been impacted by sluggish domestic growth and challenging global markets. Eskom has been hit by tariff restrictions in recent years.
The first three REIPPPP Bid Windows consumed much of the available transmission grid capacity in the Northern Cape, Eastern Cape and Western Cape. There is an urgent need to create additional transmission grid capacity for the REIPPPP, the authors said in the analysis paper, originally published by Energize in June 2015.
More recently, Abengoa and IDC inaugurated March 15 the 50 MW Khi Solar One solar tower. In March, ACWA Power and Solafrica launched the 50 MW Bokpoort parabolic-trough plant, which includes 9.3 hours of TES.
Next in line, four projects are underway. Abengoas 100 MW Xina Solar One plant is expected to come on stream in the third quarter of 2017. Cobra and Emvelos 100 MW Ilanga 1, Engies 100 MW Kathu, and ACWA Power and SolarReserves 100 MW Redstone plant, are all scheduled to be operational by 2018.
With 12 hours of TES capacity, the Redstone plant will feature the largest CSP storage capacity in South Africa to date. It will also be the countrys first molten salt tower plant.
Redstone is in the late stages of financing and were looking to start construction in the next 60 days, Smith said.
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