SA approves R33bn in renewable projects

5 November 2013

The government has approved an additional 17 renewable energy projects, paving the way for a further R33.8-billion (US$3.3-billion) worth of investment that will add up to 1 470 megawatts (MW) of clean energy to South Africa’s national grid.

The Department of Energy said on Monday that it had signed agreements with 17 new preferred bidders in the third window, or round, of its renewable energy programme for independent power producers.

This follows the signing off of 47 projects in the first and second rounds of the programme, for projects already well under way provide South Africa with around 2 400MW of renewable energy, involving investments totalling around R150-billion.

Announcing the new preferred bidders in Pretoria, Energy Minister Ben Martins said that most of the first- and second-round projects were currently under construction, with come expected to start delivering energy by December.

Martins noted that a total of 93 bids (for solar photovoltaic, wind, concentrating solar power and landfill gas) amounting to 6 023MW had been received for the third round of bidding. No bids had been received for biogas, even though the department had a 12MW maximum allocation for this round.

“The bids amounted to 6 023MW, while the available megawatts for allocation is only 1 473MW,” Martins said, adding that department had been pleased with the competitive pricing offered by the bids.

According to Business Day, 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.

State electricity company Eskom will buy power from the new plants once they up and running, in terms of power purchase agreements signed with the producers and backed by the government.

South Africa is presently 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.