Business

Renewables get R50bn private sector boost

Private sector to invest another R50bn in renewables

Barely 24 hours after his cabinet colleague asked for the procurement of new electricity generation capacity, Mineral Resources and Energy Minister Gwede Mantashe on Thursday night announced the preferred bidders who will jointly invest R50 billion in renewable energy projects expected to start generating by April 2024.

On Wednesday October 27 Public Enterprises Minister Pravin Gordhan held a briefing about the current round of load shedding that intensified to stage four on that day.

He expressed his frustration at the slow pace of the procurement programme for new generation capacity, stating that the country needs an additional 4 000 – 6 000MW.

Mantashe on the other hand emphasised that newly procured projects still need to be developed and are not an immediate solution for load shedding.

“The problem is not a shortage of capacity connected to the grid. The problem is projects connected to the grid are not available.”

Eskom needs to be fixed, said Mantashe.

The preferred bidders jointly offered 2,583 MW, of which 1,608 MW will be based on onshore wind and 975 MW solar PV.

The weighted average fully indexed price of the preferred bidders is 47.3c/kWh with the wind projects coming in at 49,5c/kWh ad solar PV at 42,9c/kWh.

This is the cheapest since the inception of government’s renewable energy procurement program in 2021. The prices could however have been even lower if not for constraints on the transmission grid that prevented some of the cheaper projects to be selected.

From the results announced it is clear that grid constraints are now shaping the development of renewable energy countrywide with projects increasingly being situated in provinces less preferred by bidders in earlier rounds.

The Free State got a total of 8 projects, which is more than the Northern Cape (7) with its premium solar resources. The Western Cape also got seven projects, Eastern Cape 2 and KwaZulu-Natal one.

Officials of the department confirmed that the grid is now saturated in the Northern and Western Cape with little capacity left in the Eastern Cape.

Nevertheless, Eskom will do a reconciliation after this announcement to confirm where there is still capacity left.

It is clear that the appetite among investors was huge with a total of 102 bid responses representing 9 644 MW.

Mantashe said the preferred bidders will now work towards financial close by December.

The department plans to release the next bid window in January next year.

The winning bidders are:

Coleskop WEF

Fully Indexed Price (ZAR/MWh): R601.17

Contracted Capacity (MW): 140

Province: Eastern Cape

Local Municipality: Inxuba Yethemba

Wolf Wind Farm

Fully Indexed Price (ZAR/MWh): R617.7

Contracted capacity: 84

Province: Eastern Cape

Local municipality: Dr Beyers Naude

Sannaspos Solar PV Project

Fully Indexed Price (ZAR/MWh): R479

Contracted capacity: 75

Province: Free State

Local municipality: Mangaung

Grootspruit Solar PV Project

Fully Indexed Price (ZAR/MWh): R476.50

Contracted capacity: 75

Province: Free State

Local municipality: Matjhabeng

Kentani Solar Facility