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South Africa's grid constraints are continuing to cast a shadow over the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), the seventh bidding round for which was launched in December for 3 200 MW of onshore wind and 1 800 MW of solar photovoltaic (PV) after months of delay.

Independent Power Producer Office head Bernard Magoro told prospective REIPPPP Bid Window Seven (BW7) bidders during a virtual conference on January 17 that the delays were largely attributed to concerns over the availability of grid-connection capacity in the wind- and solar-rich Eastern, Western and Northern Cape provinces.

Various interventions and solutions had been considered following the partial failure of BW6, during which none of the wind projects vying for a 3 200 MW allocation were selected as preferred bids after Eskom indicated that the gird capacity on which they were premised had been consumed. Therefore, only bids for 1 000 MW of solar PV advanced to the preferred-bidder stage.

The development resulted in Eskom introducing an interim grid allocation solution that departs from the previous 'first come, first served' approach to one that prioritises so-called 'shovel-ready projects', while it also sought approval for a new 'gated' approach that would enable it to set aside specific capacity for public and private procurement cycles.

Eskom also indicated that it would adopt a new curtailment framework that could unlock immediate connection capacity in those areas that are described in its most recent Generation Connection Capacity Assessment as having 'zero' capacity. The document indicates that there is 19.9 GW of grid capacity elsewhere in the country, however.

Both proposed solutions have been submitted to the National Energy Regulator of South Africa (Nersa) for noting and approval but they have not been integrated into the BW7 request for proposals (RFP). It does, however, include a modest change to the curtailment approach by removing the previous threshold restricting compensation for energy than could not be absorbed by the grid so as to "optimise the management of available grid capacity".

In addition, BW7 allows for bidders to bid based on grid-connection cost estimate letters (CELs) and valid budget quotes (BQs), instead of CELs alone.

There is also potential for bidders to access capacity recovered as a result of the expiry of BQs for projects that failed to achieve financial close under both BW5 and the Risk Mitigation procurement programme. Eskom announced the expiry in early January of five Risk Mitigation BQs and there is a likelihood of further expiries arising from BW5.

Nevertheless, prospective bidders for the allocation in REIPPPP BW7 could have to rely heavily on prospects outside of those regions with the most potent renewable resources, while Nersa continues to consider the new curtailment and grid allocation frameworks for future rounds.

MORE RENEWABLES, BATTERY & GAS PROCUREMENT SOON

Magoro indicated that BW8 for another 5 000 MW of renewables could be launched before the end of government's financial year, which runs to the end of March. Likewise the office is also preparing a third battery storage auction for 616 MW and a Coega-specific gas-to-power bid window, which will have a request for qualifications phase ahead of the RFP.

These would be in addition to the second bidding round under way for 615 MW of battery storage and the inaugural gas-to-power auction for 2 000 MW.

The grid, Magoro said, would remain a challenge for the future rounds. But he expressed optimism that all the components proposed for managing grid capacity and grid allocations would be in place for the upcoming bid windows.

Besides the modification to BW7's approach to curtailment, the other new elements introduced as part of the RFP include:

A reduction, from 100% to 80%, in the government guarantee framework should Eskom, which remains the buyer, fail to pay, while the 100% guarantee remains in place for any gover...

Global independent power company ENGIE, which is prioritising the South African electricity market for significant organic and acquisitive growth, is also open to participating in grid investments should government move to open the market to private sector participation.

ENGIE South Africa CEO Mohamed Hoosen tells Engineering News that the bigger group already has significant transmission grid assets globally and has also participated in build, own, operate and transfer projects.

South Africa's Electricity Minister, Kgosientsho Ramokgopa, has reported that government is considering various financing and private sector participation models to support an acceleration in the building of grid infrastructure, which has emerged as a key constraint to the connection of new renewables in the Eastern, Northern and Western Cape provinces.

The Minister was recently given responsibility for ensuring that matters concerning "transmission are dealt with, including the issuing of the requests for proposals", as well as "developing and agreeing on financing models and options for transmission together with National Treasury and the Presidency".

Cabinet is expected to consider a strategy for unlocking private finance and capacity early in 2024, with Ramokgopa having already indicated that he believes Eskom's Transmission Development Plan (TDP), which currently aims to add 14 000 km of new powerlines by 2032, should be accelerated.

He has also indicated a need to bring forward some of the TDP investments, with the current plan having earmarked the lion's share of the roll-out only for the period after 2028.

Hoosen reports that a portion of ENGIE South Africa's 4 GW renewables pipeline, which has been enlarged following the acquisition in December of BTE Renewables, and its 3 GW portfolio of advanced projects, are in grid-constrained areas and that its growth ambitions could, thus, be enhanced by new and accelerated grid investment.

However, for ENGIE South Africa to participate Hoosen says government's private sector participation policy would have to be certain, while the actual deployment model would also have to be supportive and consistent.

"What is important is to be very clear about the model from the start, as challenges arise when there is uncertainty on the policy or when changes are introduced during implementation," Hoosen says.

PROJECT CONSTRUCTION & NEW BIDS

The company's immediate focus, however, is on the construction of projects awarded under Bid Window Five (BW5) of South Africa's renewables procurement programme and the risk mitigation scheme, as well as bedding down the BTE Renewables acquisition. This, while simultaneously preparing bids for the procurement programmes launched for wind and solar, battery storage and gas-to-power (GTP).

ENGIE South Africa is particularly interested to learn whether brownfield conversions and expansions will be considered under the recently launched 2 000 MW GTP bid window, given its position in the existing 670 MW Avon and 335 MW Dedisa diesel-fired peaking stations - assets secured by the then GDF Suez group, now ENGIE, during South Africa's first-ever independent power producer procurement programme.

Hoosen believes a conversion of the plants to operate using gas (and at a mid-merit-type profile, rather than their current peaking profile) represents a compelling case, from both a cost and speed to deploy perspective. But the group is also assessing greenfield opportunities, including facilities that could integrate with the common gas infrastructure being envisaged for locations such as Richards Bay and Coega.

Hoosen says coordination across multiple developments and across multiple project sponsors could prove challenging, however, particularly given that there would be a firm date for commercial operation of the GTP facility. That said, the benefits of shared infrastructure could also be material.

ENGIE South Africa will also participate in BW7 of the renewables programme, under which ...

The Department of Mineral Resources and Energy (DMRE) and the Independent Power Producer Office (IPPO) have a busy week ahead, with three virtual bidders conferences to be hosted over Wednesday and Thursday, and with the department also scheduled to host a public workshop on the draft 2023 edition of the Integrated Resource Plan (IRP 2023).

The bidders conferences follow the release, on December 14, of three new requests for proposals (RFPs) for the public procurement of 7 615 MW of new generation capacity from wind, solar photovoltaic (PV), gas to power and battery energy storage technologies.

Under Bid Window Seven (BW 7) of the Renewable Energy Independent Power Producer Procurement Programme, the DMRE is seeking to procure 5 000 MW of new renewable energy, comprising 3 200 MW of onshore wind and 1 800 MW of solar PV.

The bid window is the first launched following the partial failure of BW 6, when only solar preferred bidders, with a combined capacity of 1 000 MW, were selected after Eskom informed the wind bidders, which had been vying for a 3 200 MW allocation, that their grid capacity at the locations proposed for connection had been fully absorbed.

These grid constraints will remain a key backdrop to BW 7 and could force bidders to propose projects in areas with less potent resources, but where there is remaining capacity to connect.

It is not yet clear whether grid-releasing curtailment will be integrated into the round, with Eskom having confirmed in December only that a curtailment framework had been presented to the National Energy Regulator of South Africa for approval.

In October, Eskom published its latest Generation Connection Capacity Assessment (GCCA), indicating there to be 19.9 GW of grid-connection capacity available nationally, but with zero capacity remaining in the three Cape provinces and the Hydra Central area, which borders the Cape provinces and the Free State. It later indicated that a curtailment addendum to the GCCA would be published that could unlock 4 GW of connection capacity in the Eastern and Western Cape provinces.

Bidders are expected to be provided with additional information on the approach that will be taken to the prevailing grid constraint during a virtual bidders conference, which is schedule for 9:00 on January 18.

At 14:00 on the same day, a virtual bidders conference is also planned for the second bid window of government's Battery Energy Storage IPP Procurement Programme, or BESIPPPP BW 2, following the recent unveiling of preferred bidders following the inaugural bidding round.

On November 30, four utility-scale battery energy storage system projects in the Northern Cape, with a combined investment value of R10-billion, were named as preferred bids, while negotiations were continuing with a fifth bidder.

Through BESIPPPP BW 2, government is seeking to procure 615 MW/2 460 MWh across eight substations in the 'North West Supply Area'.

At 9:00 on January 18, meanwhile, a virtual conference is planned for government's inaugural 2 000 MW Gas Programme, or GASIPPPP BW 1, the RFP for which was also released in December.

GASIPPPP BW 1 has been launched on a site-agnostic basis, with the DMRE indicating that a separate procurement process will be held for 1 000 MW of capacity to be developed near to the Port of Ngqura, in the Eastern Cape.

The gas programme was launched just ahead of the DMRE's release of the draft IRP 2023 for public comment.

The document includes a far larger allocation for gas for the period to 2030 than is the case in the current IRP 2019; a position that not only reduces the renewables allocation for the period relative to the current IRP but which is likely to face heavy scrutiny and criticism from many of those who will comment on the plan ahead of the February 23 deadline for written comments.

The DMRE has not provided for oral hearings as has been the case previously and has instead only set aside two dates for public workshops, with the first workshop schedu...

The City of Cape Town has issued the latest in a series of power-related tenders aimed at mitigating the impact of loadshedding and diversifying its energy supply from Eskom.

The city says this is in line with its programme of adding independent power to its grid.

The new tender aims to procure power from existing generators.

A two-pronged procurement structure will be followed, allowing bidders to supplement dispatchable/reserve power with an optional self-dispatchable component, with the latter being at a lower cost than the prevailing Eskom Megaflex tariff.

The maximum envisaged procured capacity (depending on the level of response and pricing) is 300 MW of dispatchable/reserve power capacity and 200 MW of self-dispatchable power capacity.

The closing date for tender submissions is April 8.

"The most important current energy priority is ending loadshedding in Cape Town, with short-term plans to protect against the first four stages of Eskom loadshedding by 2026, adding 650 MW of independent power to our mix within five years, and building up to the ultimate goal of access to additional independent power to put an end to Eskom loadshedding," says City of Cape Town Energy MMC Beverley van Reenen.

The city's short-term loadshedding mitigation plans (up to 2026) should be achieved largely through a mix of electricity from the Steenbras hydro plant; 500 MW of dispatchable energy; as well as demand management programmes.

Demand management programmes include the curtailment of large power users, as well as the Power Heroes programme, which is a voluntary scheme for households and small commercial customers that enables the remote control of power-hungry appliances, such as geysers and pool pumps.

The list of Cape Town's power supply diversification initiatives include securing embedded independent power producer (IPP) renewable energy (200 MW), with the goal of diversifying electricity suppliers for more cost-effective electricity (currently under way); a dispatchable IPP programme (up to 500 MW), which a key loadshedding mitigation mechanism, with ten-year power contracts for dispatchable power plants (under way); wheeling (up to 350 MW), a city-enabled means of third parties selling electricity to each other using existing grid infrastructure (under way); private small-scale embedded generation, or SSEG (up to 100 MW), where residential and commercial customers are enabled to generate electricity for their own use, while also being credited for excess generation (done); and city-owned SSEG, up to 20 MW, from the Atlantis plant (7 MW) and solar energy at city facilities (13 MW) (under way).

The South African National Roads Agency Limited (Sanral) says it will issue at least 70 tenders "in the next couple of weeks".

In terms of the State-owned company's interim preferential procurement policy (PPP), at least 30% of these contracts will be allocated to smaller black-owned construction companies.

The announcement comes after Sanral closed 77 tenders worth R6.43-billion in December.

Sanral CEO Reginald Demana says the agency now aims to put out at least another 70 tenders to the market in the coming weeks.

This will result in about R28-billion of tenders advertised under the interim PPP for the current 2023/24 financial year.

"By March, we want to have about R28-billion worth of tenders in the market," confirms Demana.

He says the work Sanral has put out to market is spread across the country.

The Western Region (Western Cape and Northern Cape) will get contracts worth R600-million.

The Southern Region (Eastern Cape) will see contracts to the value of R2.8-billion.

The Eastern Region (Free State and KwaZulu-Natal) will have contracts worth R2.1-billion.

The Northern Region (Gauteng, Limpopo, Mpumalanga and North West) will feature contracts worth more than R500-million.

The Eastern and Southern regions are in the midst of significant road infrastructure projects, such as the N2/N3 expansion in KwaZulu-Natal, and N2 Wild Coast project, in the Eastern Cape.

Engineering News editor Terence Creamer discusses the background to the publication for public comment of the latest Integrated Resource Plan (IRP); the main changes in the IRP 2023, compared with the IRP 2019; the initial reaction to the new IRP; and the public commentary process.

While South Africa's latest draft electricity plan is signalling a pullback in renewables investments for the period to 2030 relative to the prevailing policy, the rest of the world is powering ahead, with the International Energy Agency (IEA) reporting that 50% more renewables capacity was installed globally in 2023 than in 2022 and with record-breaking growth forecast for the coming five years.

In its 'Renewables 2023' report, the IEA states that 507 GW of renewable-energy capacity was installed last year, increasing the installed base to about 3 600 MW, with solar photovoltaic (PV) accounting for three-quarters of worldwide additions.

The largest growth took place in China, which commissioned as much solar PV in 2023 as the entire world did in 2022, while China's wind power additions rose by 66% year-on-year. In addition, the IEA now expects China to achieve its national 2030 target for wind and solar PV installations in 2024, six years ahead of schedule.

Renewable energy capacity in Europe, the US and Brazil also hit all-time highs, and solar PV and onshore wind deployment in these territories through to 2028 is expected to more than double when compared with the last five years.

About 64 GW of new renewable capacity is forecast for sub-Saharan Africa from 2023 to 2028, more than doubling the region's current installed capacity. Much of this growth, however, hinges on South Africa, where the outlook could be affected by the lower ambition signalled in the country's yet-to-be-approved Integrated Resource Plan of 2023 (IRP 2023), which is out for comment.

The IEA forecasts that global renewables capacity will grow to 7 300 GW over the five years to 2028, with nearly 3 700 GW expected to be installed during the period, or more than has been installed since the first commercial renewable energy power plant was built more than 10 years ago.

Solar PV and wind account for 95% of the expansion, with renewables overtaking coal to become the largest source of global electricity generation by early 2025. By 2028, potential renewable electricity generation is expected to reach around 14 400 TWh, an increase of almost 70% from 2022.

To meet the COP28 goal of tripling capacity by 2030, which would increase the installed base to 11 000 GW, would require governments to act on policy uncertainties and cumbersome administrative procedures, as well as to tackle insufficient grid investment and the current insufficient financing in emerging and developing economies.

"For me, the most important challenge for the international community is rapidly scaling up financing and deployment of renewables in most emerging and developing economies, many of which are being left behind in the new energy economy," IEA executive director Fatih Birol says.

He notes, too, that onshore wind and solar PV are cheaper today than new fossil fuel plants almost everywhere and cheaper than existing fossil fuel plants in most countries.

The report notes that prices for solar PV modules in 2023 declined by almost 50% year-on-year, while these cost reductions are set to continue on the back of yearly global manufacturing capacity reaching 1 100 GW by the end of 2024, which significantly exceeds demand.

"By contrast, the wind industry (outside of China) is facing a more challenging environment due to a combination of ongoing supply chain disruption, higher costs and long permitting timelines, which require stronger policy attention," the report states.

It also concludes that the world's capacity to generate renewable electricity is expanding faster than at any time in the last three decades, offering a "real chance of achieving the goal of tripling global capacity by 2030".

In South Africa, however, there is a risk of a slowdown in renewables investment, despite the country's world-class solar and wind resources, which have made wind and solar PV the cheapest sources of new electricity.

Deployment has already been lumpy since the resumption of public procurement in 202...

Toyota South Africa Motors (TSAM) says it has sold 142 612 vehicles in 2023 - more than 10 000 units up on 2022 numbers.

This is an 8% increase in a domestic market that in 2023 inched up 0.5% in overall sales compared with 2022.

The local arm of the Japanese car maker also achieved a market share of 26.8% in 2023, which is the highest share in the company's history.

This means that more than one in four vehicles sold in the local market comes from the Toyota stable.

TSAM sold 132 035 vehicles in the South African market in 2022, recording a market share of 24.9%.

"I am extremely proud and humbled by what the Toyota team has achieved," says TSAM sales and marketing senior VP Leon Theron.

"Against a backdrop of economic doom and gloom, our dealers and staffers have pulled off a remarkable result."

Theron also paid tribute to Toyota's loyal customers.

"Thank you for being a part of our journey and for believing in us all these years. Toyota has been the number-one brand for more than 44 years and through our products and services, we hope to keep you in the family well into the future."

South Africa's State-owned Transnet National Ports Authority (TNPA) has announced that it has selected a public-private consortium as the preferred bidder to develop and operate a liquefied natural gas (LNG) terminal at the Port of Richards Bay's South Dunes precinct.

The Vopak & TPL Consortium Venture was selected following a bidding process for an entity to design, develop, construct, finance, operate, and maintain the LNG terminal for a period of 25 years.

The project is scheduled to enter into commercial operation during 2027, with the next step being the signing of the terminal operator agreement, which TNPA said was currently under negotiation.

Vopak is a Dutch company with a network of 78 terminals, including LNG terminals, in 23 countries, while TPL is the State-owned entity responsible for South Africa's strategic fuel pipeline assets.

TNPA will invest in the common user port infrastructure, while the terminal operator will provide the terminal infrastructure.

The appointment came only days after the Department of Mineral Resources and Energy (DMRE) published a draft Integrated Resource Plan (IRP 2023) for electricity, which includes a large allocation for new land-based gas-to-power (GTP) facilities.

The draft IRP 2023, which is out for public comment, has a specific allocation for a 3 000 MW GTP plant to be developed by Eskom at Richards Bay, in KwaZulu-Natal.

A further 3 000 MW has been allocated for GTP facilities to be built by independent power producers, with 2 000 MW currently the subject of a site-agnostic bidding process, with Richards Bay a possible location for some of the bidders.

TNPA described the project as being in line with the DMRE's Strategic Plan for 2020-25, which "focuses on the development of the gas market as an alternative source of energy to meet limited and depleting energy supply", while also supporting the country's IRP targets.

"TNPA is excited about the prospects this project brings, especially that this gas infrastructure project will be the first of its kind in South Africa," TNPA managing executive for the Eastern Region ports Moshe Motlohi said in a statement.

The Department of Mineral Resources and Energy (DMRE) has belatedly released the background technical information that has been used to inform the assumptions included in the draft Integrated Resource Plan of 2023 (IRP 2023) and will host two virtual workshops this month to provide greater insight into the plan.

However, no formal public hearings are scheduled either ahead of or after the February 23 deadline for the submission of written comments, despite serious and growing concern over the plan's assumptions and outcomes.

The so-called draft IRP 2023 was published for public comment only on January 4 and the DMRE's current intention is to present a revised version (taking account of comments received) to the social partners at the National Economic Development and Labour Council (Nedlac) in April, before seeking Cabinet approval in May for the Gazetting of the final version.

To meet the deadline - which would be unprecedented, given that it took five years, from 2015 to 2019, to secure approval for the prevailing IRP 2019, whose assumptions were, thus, considered to be out of date from day one - only virtual workshops have been scheduled for January 18 and 31 rather than the provincial physical hearings that accompanied the previous update.

Given the significant changes outlined, however, there are already suggestions that the written comment period may have to be extended and that the process should include an opportunity for stakeholders to make oral submissions.

Director-general Jacob Mbele has indicated that some commentators could be invited to make presentations during the two workshops but made no commitment to broadening these into formal public hearings, arguing that it had become urgent to update the IRP considering changes to circumstances and assumptions.

It is precisely these assumptions, however, that several stakeholders are already starting to criticise and question; questioning that was intensified by the fact that the Gazette Notice containing the document was published in the absence of the data underpinning the assumptions used.

There has been criticism, for instance, of the draft IRP 2023's assumption of ongoing loadshedding until at least 2027 and its indication that the shortfall can be overcome only once there was 7 220 MW of new gas-to-power (GTP) capacity built and that these dispatchable plants should operate at a "high utilisation factor", of over 85% (86.71% to be precise, as outlined in Annexure B).

GAS-TO-POWER SCALE-UP

This outcome represents a significant scale-up from the IRP 2019 both in terms of assumed GTP capacity and future gas volumes, which are assumed to be low in the current version, with the gas plants expected to offer flexibility rather than near consistent supply.

The cost implications are not fully clear even after the publication of the technical cost assumptions used, which are also open to contestation.

Mbele acknowledged that the plants would, at least initially, operate using imported liquefied natural gas (LNG), which would expose the electricity supply industry to a foreign-exchange (forex) risk that had hitherto been marginal.

On January 10, the State-owned Transnet National Ports Authority announced that it had appointed a consortium comprising Vopak Terminal Durban and Transnet Pipelines as the preferred bidder to develop and operate LNG terminal at the Port of Richards Bay's South Dunes Precinct.

There was also no immediate clarity in the IRP 2023 regarding the gas-supportive infrastructure requirement, or the possible cost implications of building such infrastructure.

The increased weighing of GTP in the draft arises principally from the hard wiring of two Ministerial determinations into one of five scenarios outlined for 'Horizon 1', which covers the period from 2024 to 2030: a 3 000 MW allocation for GTP arising from investments procured from independent power producers; and a 3 000 MW allocation related to a determination, secured in 2023, for an Eskom GTP pr...