South Africa intends launching a pilot programme for the procurement of 1 164 km of 400-kV powerlines, involving seven corridors in three provinces, in November as part of an initiative to mobilise private investment to address a grid backlog that is currently constraining new projects in high potential renewable-energy regions.

The pilot independent transmission project (ITP) request for proposals will be overseen by the Independent Power Producer Office (IPPO), which has managed South Africa’s public renewables procurement since 2011, and will be preceeded by the release of a request for qualification in July.

On March 28, Electricity and Energy Minister Dr Kgosientsho Ramokgopa Gazetted a Ministerial Determination under Section 34 of the Electricity Regulation Act opening the way for the procurement of ITP capacity in the Northern Cape, the North West province and Gauteng.

The determination designates the Department of Electricity and Energy (DEE) as the procurer and the National Transmission Company South Africa (NTCSA), the Eskom subsidiary of responsible for the grid and system and market operations, as the buyer of the ITP capacity over the concession period.

Neither the precise ITP model, nor the concession term, has been disclosed, but Ramokgopa indicated during a briefing on April 1 that some form of build, operate, own and transfer, or BOOT, arrangement was likely to be implemented.

He also reported that the regulations required for advancing the ITP programme would be published on April 3, presumably for public comment.

The initial seven corridors had been selected from within the NTCSA’s Transmission Development Plan project pipeline, which envisages the roll-out of some 14 000 km of new powerlines and associated grid infrastructure over the coming ten years.

ADVANCED PROJECTS SELECTED

Ramokgopa said that only “late-stage” projects had been chosen for the pilot so as not to burden ITP investors with the often-difficult task of securing the servitudes and finalising the environmental-impact assessments needed for transmission infrastructure.

Besides 1 164 km of powerlines, 2 630 MVA of transformation capacity will be procured across the following corridors: Aries-Aggeneis, Groeipunt, Boundary-Ferrum, and the Nama strengthening and Gromis projects, in the Northern Cape; Mookodi-Hermes and Mahikeng Integration Phase 1, in the North West; and Hera-Westgate, in Gauteng.

Once completed in 2029, the pilot ITPs would unlock grid capacity for a further 3 200 MW of new solar and wind capacity.

The DEE’s Shaakira Karolia reported that a reverse-bidding auction was envisaged, whereby the lowest-cost bidders would be selected to build the initial projects and recover their capital, operations and maintenance costs, as well as earn a reasonable return over the concession period.

These costs would be recovered through the regulated tariff, possibly using the Regulatory Clearing Account mechanism.

While government had studied hundreds of similar concessions in countries such as Brazil, Chile, Peru and India, a multidisciplinary team, involving government officials and National Energy Regulator of South Africa members, had been established to ensure that all of the regulatory components were in place ahead of the pilot.

Ramokgopa stressed that the grid infrastructure built by the ITPs would be additional to the capital expenditure under way at the NTCSA and were being pursued largely because neither the NTCSA nor government had the financial resources in hand to address the prevailing grid backlog.

Describing it as a “step change”, the Minister said the ITP programme was one of the mechanisms that the Government of National Unity aimed to use to place South Africa on a higher growth trajectory by addressing the electricity constraint to economic activity.

He also expressed confidence in the ability of the IPPO to oversee the pilot procurement, despite the fact that it was currently seeking a replacement for its previous head, Bernard Magoro, whose contract had expired.

An acting head would be appointed soon, and government was targeting to find a permanent replacement within three months.

However, Ramokgopa indicated that after the pilot phase it was likely that future procurement could be managed by a unit that was proposed for establishment at the Development Bank of Southern Africa.