Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

The value of the project has not been disclosed, but Sappi tells Engineering News Online that it expects the plant to be operational during 2018 and that there is also potential to expand the facility at a later stage to 55 MW.

Financial close is not expected before July 31, 2015, following which construction will begin.

The project is the only biomass project chosen during the fourth REIPPPP bid window, which closed in August last year, with the other preferred projects being mostly wind and solar photovoltaic developments, destined for the Northern Cape and Eastern Cape provinces. It is understood, though, that a Free State mini-hydro project has also been selected following what was a much-delayed bidding round.

Sappi says the biomass will be supplied from its plantations and from the mill and that the plant will incorporate standard technology – a boiler that generates steam and is passed through a steam turbine generator.

Sappi would hold 30% of the development, which is being pursued in partnership with KC Africa (30%), which is owned by KC Green Holdings, of South Korea, and Fusion Energy (30%), part of the black- and women-owned Johannesburg investment holding company, Fusion Global.

In addition, an Ngodwana Energy Employees Trust and an Ngodwana Energy Community Trust will each hold a 5% stake in the project.

Nedbank and Absa will provide the debt finance.

ELB Engineering Services has been appointed as engineering, procurement and construction contractor.

Sappi Southern Africa CEO Alex Thiel reports that the company was informed of Ngodwana Energy’s selection as a preferred bidder on April 10 and says the group is pleased to be able to contribute to the increased availability of renewable energy in South Africa.

“Sappi will continue to focus on extracting maximum value from the renewable and sustainable wood fibre that we grow. This project builds on our earlier R3-billion investment at Ngodwana mill and further strengthens our presence in Mpumalanga province,” Thiel adds.

Globally, Sappi has developed and constructed five hydro, two gas and 31 steam turbines that generate around 800 MW of renewable power across 14 sites in seven countries. In South Africa, the group’s current capacity stands at 150 MW, but it says there is potential to increase this capacity by 50% over the medium term.

The Ngodwana Energy project, situated 50 km west of Mbombela on the Sappi Ngodwana mill site, will use proven technology to produce base-load electricity that will be fed into the national grid.

The plant is expected to produce 200 000 MWh a year, representing a 90% availability, which compares favourably to other renewables sources, which typically have capacity factors of between 30% and 40%.

Following four REIPPPP bidding rounds, South Africa has now selected over 70 renewable-energy projects for development across the country. The programme has also attracted hundreds of billion of rands worth of private investment into the country’s supply-stretched electricity sector.

However, the last two rounds have faced material delays and there is currently much uncertainty about government’s approach to the fifth bid window, with details yet to emerge.