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Risk Mitigation Independent Power Producer Procurement Programme, South Africa – update

Iamge of Karpowership

Photo by Karpowership

1st December 2023

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).

Location
South Africa.

Project Owner/s
Department of Mineral Resources and Energy (DMRE).

Project Description
The RMIPPPP, also known as the ‘emergency’ procurement round, is a response to the short-term electricity supply gap identified in the Integrated Resource Plan 2019.

The objective of the RMIPPPP is to not only alleviate the current electricity supply constraints but also reduce the use of diesel-based peaking electrical generators.

The programme aims to procure 2 000 MW from a range of energy sources and technologies.

The DMRE issued a request for proposal for the RMIPPPP in August 2020.

Mineral Resources and Energy Minister Gwede Mantashe released the names of the eight preferred bidders on March 18, 2021:

  • the 150 MW ACWA Power Project DAO – a hybrid facility comprising solar photovoltaic (PV) and a battery energy storage system (BESS);
  • a 450 MW Karpowership SA Coega facility – a gas-to-power plant based on imported liquefied natural gas (LNG) – in the Northern Cape;
  • the 450 MW Karpowership SA Richards Bay facility – a gas-to-power plant, based on imported LNG – in the Northern Cape;
  • a 320 MW Karpowership SA Saldanha facility – a gas-to-power plant, based on imported LNG – in the Northern Cape;
  • the 198 MW Mulilo Total Coega facility – a hybrid plant employing solar PV and imported LNG;
  • the 75 MW Mulilo Total hydra storage project – a hybrid facility comprising solar PV and a BESS;
  • the 128 MW Oya Energy hybrid facility – a hybrid facility comprising solar PV, wind and a BESS, in the Northern Cape; and
  • the 75 MW Umoyilanga Energy – a hybrid facility comprising solar PV, wind and a BESS, Northern and Eastern Cape.

Umoyilanga Energy will operate as a virtual power plant, combining generation from two sites that are 900 km apart. Avondale, in the Northern Cape, will include 115 MW of solar PV and 30 MW of battery storage, while Dassiesridge, in the Eastern Cape, will incorporate 63 MW of wind and 45 MW of battery storage.

To meet its 75 MW dispatchable profile, Dassiesridge will charge batteries from the wind energy at night and discharge power in the morning until the sun rises. The solar installation at Avondale will supply the bulk of the energy during the day, supplemented by wind energy from Dassiesridge. Excess solar energy will be used to charge the batteries at Avondale, which will discharge after sunset.

In June 2021, the DMRE announced the appointment of three additional preferred bidder projects under the RMIPPPP, following the completion of “value for money” negotiations with Norwegian renewables power producer Scatec.

To meet the dispatchable profile demanded under the RMIPPPP, the three projects – Kenhardt 1, Kenhardt 2 and Kenhardt 3 – will together produce 540 MW of solar and 225 MW/1 140 MWh battery storage.

Scatec has indicated that the projects are the only ones selected under the RMIPPPP that rely exclusively on renewable energy, making the three-project portfolio arguably one of the biggest single-site solar-storage hybrids in the world.

The projects will include average local content of 50% during construction, South African entity participation of 51% and black ownership of 41%.

Potential Job Creation
The Oya Energy hybrid facility and Umoyilanga Energy will contribute 3 966 job-year opportunities in the construction and operation of these power plants.

Capital Expenditure
The combined investment value of the initial eight projects is estimated at R45-billion.

The Oya Energy hybrid facility and Umoyilanga Energy projects have a combined investment value of R14.6-billion.

Planned Start/End Date
The Oya Energy hybrid facility and Umoyilanga Energy projects are expected to be online from 2025 onwards.

Umoyilanga  Energy is expected to achieve financial close by the second half of October 2023, with construction starting immediately thereafter to achieve commercial operations in May 2025.

Latest Developments
Karpowership has been confronted with a new challenge, as civil society groups have appealed the environmental approval it received for its proposed Richards Bay plant in October 2023.

The groups groundWork and the South Durban Community Environmental Alliance (SDCEA), represented by the Centre for Environmental Rights, have submitted their appeal. The appeal is also being supported by three additional organisations with similar objectives – Natural Justice, the Green Connection and Oceans Not Oil.

Forestry, Fisheries and Environment Minister Barbara Creecy approved the environmental authorisation for the project in the same month, after the company had been allowed another opportunity to resubmit its environmental-impact assessment (EIA). This followed a previous appeals process, where environmental authorisation for three of its proposed plants was eventually revoked, as a result of issues with public consultation processes.

The new appeal will delay the Richards Bay plant, which is supposed to reach financial close by the end of 2023.

Karpowership SA cannot go ahead with the project until the appeal process is finalised.

Karpowership SA has acknowledged the new challenge, but it has said that, while it respects any role in protecting the environment, these groups' continuous challenges fail to substantively counter the exhaustive EIA methodology, which is based on comprehensive research and enhanced public participation.

“The quality of our EA was recognised by the Department of Forestry, Fisheries and the Environment decision to grant approval,” Karpowership has argued.

The DFFE has also issued a provisional atmospheric emission licence to Karpowership SA for the Richards Bay project, which it says demonstrates that the company complies with the required environmental laws and standards.

The appellants contend that there are still issues regarding the public participation process – specifically a lack of "adequate" consultation with local fishing communities whose livelihoods, cultural ways of life and food security would be impacted on.

They have also emphasised that there has been a lack of consultation regarding a biodiversity agreement Karpowership SA reached with provincial wildlife authority Ezemvelo Wildlife, in KwaZulu-Natal, ahead of obtaining environmental authorisation.

Karpowership SA bought and donated a game farm to Ezemvelo, which, in turn, indicated it would not object to the environmental authorisation being issued.

There has also been a lack of consultation regarding the controversial biodiversity offset, which has been shrouded in secrecy and brought in at a very late stage, with no consultation held to explain what this entails, a statement from the appellants reads. This is meant to compensate for “the biodiversity loss that the project will cause to the sensitive estuarine ecosystem in and around the port, in turn devastating critical fish nurseries that stock at least 300 km of coastline,” the appellants have argued.

They also suggest the climate change impact assessment conducted is inadequate.

If this appeal is dismissed, then the appellants have the option to approach the court to review the matter.

Key Contracts, Suppliers and Consultants
Scatec (Kenhardt 1, Kenhardt 2 and Kenhardt 3); G7 Renewable Energies, ENGIE, Meadows Oya Energy and Perpetua RMI4P (Oya Energy hybrid facility); and EDF Renewables and Perpetua Holdings (Umoyilanga Energy).

Contact Details for Project Information
DMRE, Natie Shabangu, email natie.shabangu@dmre.gov.za; or Thandiwe Maimane, email thandiwe.maimane@dmre.gov.za; mediadesk@dmre.gov.za.

Edited by Creamer Media Reporter

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