15 April 2014
South Africa’s Department of Energy is to increase the amount of energy it will be procuring under the third window of its renewable energy programme for independent power producers, Energy Minister Ben Martins announced on Tuesday.
In November, the department signed agreements with 17 new preferred bidders in the third round of the programme, following the signing off of 47 projects in the first and second rounds, bringing to 64 the total number of renewable energy projects approved by the government since December 2011.
Once they are all operational, the 64 projects – representing foreign and domestic investment of over R100-billion – will add around 3 900 megawatts (MW) of wind, solar photovoltaic and concentrating solar power to South Africa’s energy mix.
On Tuesday, Martins said in a statement that this department would be allocating additional megawatts to the third window of the programme, thus including additional bidders, due to the increasingly competitive pricing offered by the round three bids.
Business Day reported in November that the average price offered for power generated from wind – which received the bulk of the third-round allocation – had dropped from R11.43 per kilowatt hour (kWh) in the first round to R6.65/kWh in the third round.
“The department will, in this regard, follow due procurement process to include additional bidders under window 3,” Martins said, giving no further specifics.
He added that submissions for the fourth window of the programme, which entails the procurement of a further 1 000 MW of renewable energy, was on track to close in August. The programme has five windows altogether.
While renewable energy accounted for less than 1% of South Africa’s energy mix in 2012, this is expected to reach 12% by 2020. According to research released in October by analysts Frost & Sullivan, this would place South Africa in the “global top 15 countries” with regard to the implementation of renewable energy projects.
Announcing the latest 17 preferred bidders in November, Martins noted that South Africa was currently rated as the 12th most attractive investment destination for renewable energy.
“This bodes very well for South Africa, as the programme has achieved international acclaim for fairness, transparency and certainty of programme,” Martins said, adding that there had been a progressive increase in the local content and job creation numbers offered by the bidders.
The department’s director-general, Nelly Magubane, said that some bidders had exceeded the local content requirement of no less than 40%, with some indicating that their projects would involve up to 56% local content.
Martins said the energy sector was expected to play a major role in creating green sector jobs, developing skills and transferring technology into South Africa’s economy.