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Lack of curtailment framework holding up renewables round, IPP Office confirms

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Photo by Creamer Media

7th November 2023

By: Terence Creamer

Creamer Media Editor

     

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South Africa’s Independent Power Producer (IPP) Office has indicated that the procurement documentation for both the next public renewables round and a gas-to-power programme are at an advanced stage but the timing of their release to the market is dependent on the conclusion of “various grid optimisation initiatives”, including an updated curtailment framework.

Electricity Minister Dr Kgosientsho Ramokgopa revealed recently that Bid Window Seven (BW7) of the renewables programme had been postponed until December and attributed the rescheduling from an already revised released date of September to delays in finalising an update to the Integrated Resource Plan (IRP).

In response to questions posed by Engineering News, the IPP Office made no firm commitment regarding the timing of the release of either BW7 or the gas-to-power request for proposals (RfPs). It also made no reference to the IRP update, which would need to be released for public comment once approved for publication by Cabinet.

Instead, the IPP Office told Engineering News that the timing of the programmes was “dependent on the conclusion of various grid optimisation initiatives which are currently under consideration by Eskom and the National Regulator”.

“We will communicate to the market as soon as those approvals are granted,” the IPP Office said in response to questions.

It also confirmed that the publication of the Generation Connection Capacity Assessment (GCCA) on October 31 was insufficient in the absence of an updated curtailment framework.

The GCCA confirmed that curtailment studies had been undertaken to provide the option for developers to connect in grid “constrained areas”.

The GCCA indicated that governance within Eskom had been “approved to a large extent” but that a regulatory approval process was required before any of the curtailment results and opportunities could be shared, either “in the next release of the GCCA or possibly sooner in an addendum”.

Curtailment involves the active reduction of output from wind and solar plants in response to system security needs or temporary transmission capacity constraints and is widely used by system operators as a cost-effective way to facilitate the introduction of renewable generators.

It has been reported that 10% curtailment could double the grid connection capacity of a province such as the Western Cape, which the GCCA shows as having no available capacity, along with the Northern Cape, the Eastern Cape and the Hydra Central supply area.

The document states that there is 19.4 GW available in the rest of the country, where the wind and solar resources remain strong but less so than in the four areas described as having “depleted” capacity.

The lack of a clear curtailment option also meant that none of the 23 wind projects that bid for a 3.2 GW allocation during BW6 advanced to preferred-bidder status, despite persistent and intensifying loadshedding.

Meanwhile, the IPP Office stressed that a tender for a transaction adviser to evaluate the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) model to improve its cost effectiveness and efficiency would have no impact on the release of any of the RfPs “currently in the pipeline”.

Besides BW7 and the gas-to-power programme, work is also well advanced on the second bidding round for battery energy storage, with projects submitted during the first round “in the final stages of evaluation”.

The IPP Office said the review of the REIPPPP model could, thus, inform future potential changes to the auction model.

“[The review] also recognises that the energy market and environment in South Africa is changing and that we will need to adapt our systems and processes accordingly.”

The IPP Office also confirmed with Engineering News that 12 projects procured across various public programmes, including nine from BW5 with a combined capacity of 1 009 MW and three from the risk mitigation round (150 MW), were currently under construction.

“A further 12 preferred bidders have signed project agreements and achieved legal close including two risk-mitigation preferred bidders (203 MW) and ten BW5 projects (750 MW) and have until end December 2023 to reach commercial close.

“In terms of BW6, all six preferred bidders are in various stages of finalising their preferred bidder understandings in order to reach commercial close.

“However, significant delays have been experienced in the issuing of Budget Quotations by Eskom, which are needed in order to conclude project agreements,” the IPP Office told Engineering News.

Edited by Creamer Media Reporter

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