150 megawatts of new electricity is expected to connect to the national grid in the next 12 to 18 months. Minister of Mineral Resources and Energy, Gwede Mantashe officiated the signing of the power purchase agreements involving three power supply projects awarded to the Norwegian based company Scatec.
The projects are part of Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) aimed at addressing Eskom’s electricity crisis. All three are based in Kenhardt in the Northern Cape.
Scatec has existing operations in the local solar energy sector. As part of the new deal, the company has joined hands with local partners with a 49% stake.
In August 2020, the Department of Mineral Resources and Energy launched a Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP). This was in response to the 2019 Integrated Resource Plan (IRP) which stated that South Africa had an energy supply gap of about 2000 megawatts (MW).
In March last year, 11 preferred bidders were announced and were expected to add 1 845 MW of energy to the grid by August this year. However, there are now delays due to litigation challenges and requests for extensions by some of the preferred bidders.
“We took a decision that the projects that were ready to sign, given challenges that the country is facing, we had to sign,” says Tshifhiwa Magoro: Head of IPP Office.
The three announced IPP’s have been given 60 days which means no later than 03 August 2022 to conclude their financial close and other regulatory requirements. The department says prices for these projects compare favourably with the range of what is currently paid by Eskom during the specified hours.
Eskom currently pays between R2 300 to R9 000 per MWh. However, the tariffs will be finalised at Financial Close, when the project tariffs are set. The technology used by these projects has been lauded by government and Eskom.
“Eskom is delighted that we have achieved this particular milestone in adding much needed generation capacity to the grid. This is unique technology in that for the first time we now have dispatchable renewable energy thanks to the combination of solar and batteries,” says Andre De Ruyter: Eskom CEO.
Scatec said for the project to succeed it cannot do it alone. It needs all stakeholders to come together.
“As far as we know it is the largest hybrid project globally. So the realization of this project is not something that Scatec can do alone,” says Terje Pilskog: Scatec CEO.
The eight other successful bidders include a controversial Karpowership, ACWA Power Project, Mulilo Total Coega, Mulilo Total Hydra Storage, Oya Energy Hybrid Facility, and Umoyilanga Energy.
Mantashe says the polarization of energy debates must come to an end as the energy from all sources is needed to solve South Africa’s energy supply crisis. He also called for speedy resolution of issues surrounding Karpowership.
“My biggest problem as a person is the polarisation of the debate among energy technologies. They fight as if in order for one to grow it must kill the other one. We need all of them, we are short of energy, we need that energy to the grid,” says Gwede Mantashe: Minister of Minerals Resources and Energy.
According to energy department, these projects will attract R15-billion in investments. It is expected that nearly 5 000 jobs will be created. The three projects have committed over R177-million towards Enterprise Development and R444-million towards Socio-Economic Development initiatives in the communities within which they are located over the lifetime of the projects.
VIDEO: Energy Minister Gwede Mantashe officiates the signing of power purchase agreements