South Africa has seen R272 billion investments from Independent Power Producer Programme since 2011.
The programme was first announced 13 years ago as part of the country’s energy mix and has seen 95 renewable energy projects rolled out and thousands of jobs created.
Energy and Electricity Minister Kgosientsho Ramokgopa gave an update on the role of IPPs in the country’s energy security in Pretoria.
It has been 208 days of no-load shedding and Minister Ramokgopa says this can also be attributed to the role of IPPs that have connected to the grid.
South Africa has been rolling out bid windows for renewable energy projects for 13 years as part of greening the country’s electricity generation.
The Minister says there’ve already been greater benefits for the country’s economy and the grid with 95 projects rolled out producing more than 7 300 megawatts of electricity.
“Out of this we have seen investments of about R272 billion but something that is understated in this is that only 18% of the R272 billion comes from outside from the countries. I’ve mentioned and in fact, 82% of these investments come from the South African commercial banks, comes from our own DFIs in the form of the IDC and the DBSA,” says Ramokgopa.
The country has also seen over 200 days of no-load shedding and the minister says this can partly be attributed to renewable energy generation with areas of potential capacity identified including in the KwaZulu-Natal province.
“An achievement will be when there’s absolutely no-load shedding and in fact, we are able to use cheaper forms of electricity generation for us to keep the lights on and that’s where the Independent Power Producers Programme comes in. And you can see that KZN outside the picker which really use diesel, there haven’t been any renewable energy programme in that part of the country, that province. So, it’s important that there has to be alignment of where the capacity is and the resource to ensure that we are able to accelerate this procurement programme.”
The IPP office has been operating since 2011 and says some projects have failed to take off and produce anticipated results with government involved in litigation with some of the power producers.
“On the failed projects, the process that we’ve taken, we’ve essentially gone through a process of getting representations from the bidders to enable us to then terminate. We have terminated all the preferred bidders that did not achieve commercial close under bid window 5 and with those we are going through process of calling the bid guarantees associated with that unfortunately. We have had some court challenges from some of those preferred bidders and we are now having to deal with that,” says head of legal at IPP Office, Lena Mangondo.
The minister believes the projects can address the socio-economic challenges and help bring down the price of electricity.
“What we know is that it’s relatively cheaper and the more technology advances, the more it becomes part of the mix, the greater the opportunity for us to ensure that we address the issue of price and it’s affordable and we can allow the economy to grow. There’s also socio-economic impact about 37% of these investments are sitting in black hands. Nine percent shareholding by communities but of course we want to do significantly more.”
Government is pushing to get more IPP projects online.
Projects with more than 8 200 megawatts of capacity are currently up for evaluation by the market between now and next year.
Government is confident that through the competitive bidding process, timely completion of contracts and an increase in market confidence, the country will benefit from IPP projects, see the prices of electricity go down and reach its targets towards the just energy transition.
Ramokgopa briefs the media on Independent Power Producer (IPP) Programme: