What the IPP office wants
• In principle no technology is excluded, and urgency is the top priority
The government’s emergency power programme will be technology agnostic, the independent power producers’ (IPP) office says. The office convened a virtual bidders’ conference on Friday to offer more detail and clarity to interested parties.
The government’s emergency power programme will be technology agnostic, though it is likely to favour fuel-based solutions, the independent power producers (IPPs) office says.
The office, which falls under the department of mineral resources & energy, issued a request in August for proposals for the risk mitigation IPP procurement programme to buy 2,000MW of emergency power
— almost 7% of SA’s average power demand.
A virtual bidders’ conference was convened by the office on Friday to offer more detail and clarity to interested parties.
Bernard Magoro, the new head of the IPP office and former systems operator at Eskom, told prospective bidders that the emergency power tender is technology agnostic.
“It is an output-based request for proposals. We do not care how you come up with a solution as long as you meet the requirements of the system operator,” Magoro said.
On Friday, mineral resources & energy minister Gwede Mantashe gazetted a determination under the Electricity Regulation Act to enable procurement of more than 11,800MW additional capacity for the national grid.
A requirement for the 2,000MW of emergency power is that it comes online as soon as possible. For this reason any power capacity that will require further grid strengthening will not be considered, Magoro said.
All emergency power must be online by June 2022, but there will be incentives in place to ensure it comes online as quickly as possible. The size of the projects can range from a minimum of 50MW to a maximum of 450MW. The power needs to be dispatchable — available on demand — between 5am and 9.30pm.
Magoro acknowledged that a fuel-based solution would more easily meet the technical requirements of the programme. However, the tender does allow for a portfolio approach, whereby a bidder could propose multiple facilities and different technologies as one project. The blended cost of such a solution could possibly be much cheaper than for one fuel-based solution.
“The government wants to procure affordable and low-cost energy to support economic growth — this is one of the critical aspects for us in designing this request for proposals.”
The department of mineral resources & energy will do a benchmarking exercise to ensure that the selected projects are seen as value for money. Economic development will remain part of the evaluation process but will count for 10% of the points, while 90% will hinge on price.
The office said the department has approached the finance minister to secure an exemption from the Preferential Procurement Policy Framework Act for this particular procurement and is in the process of obtaining a deviation from the provisions of the Broad-Based BEE Act and from the minister of trade & industry.
The final bid submission date is November 24. Evaluation starts on November 30 with an aim to announce the preferred bidders in December or January, who then have three or four months to reach financial close.
The preferred bidders will enter into power purchase agreements with Eskom and an implementation agreement with the department of mineral resources & energy.