South Africa sets renewables bidding process

The South African government has finally formally launched the long-delayed process to procure the new renewable energy generation capacity, having published an advertisement for a request for qualifications and proposals over the weekend.

The Department of Energy (DoE) has invited potential developers to submit proposals for the financing, construction, operation and maintenance of any onshore wind energy, concentrated solar thermal power, solar photovoltaic, biomass, biogas, landfill gas, or small hydro technologies.

The request for proposals (RFP) documentation would be available for download from midday August 3, 2011, and a mandatory bidders briefing session had been scheduled for September 14, at 10:00.

Successful bidders would enter into an implementation agreement with the DoE and a power purchase agreement with a “buyer”, most probably the single buyers office within State-owned utility Eskom.

No details were provide about the nature of the RFP, but Engineering News Online understands that the DoE would pursue a two-stage selection process, with price competition featuring as part of the second phase.

Other selection criteria could include technical feasibility and grid connectivity, as well as environmental acceptability, black economic empowerment, community development and local economic and manufacturing propositions.

Projects clearing these selection hurdles would then be assessed on the proposed sale price of the power produced. In other words, the renewable energy feed-in tariffs (Refit) promulgated by the National Energy Regulator of South Africa (Nersa) in 2009 would not be deployed, but would be used as a “ceiling” price for any bid.

The abandonment of the Refit has raised anxiety levels among potential developers, which warned that the absence of a predetermined tariff would raise the risks associated with the roll-out of renewables projects in South Africa.

But the DoE and the National Treasury had raised their own concerns that the Refit might not be legally compliant with government procurement rules. They had also indicated that they did not want to repeat some of the financial errors associate with Refit programmes in other countries.

Government had, thus, opted to include an element of price competition. Nevertheless, the programme would still require special dispensation to depart from government’s preferential procurement rules, which currently included a 90% weighting towards price and only a 10% weighting for other selection criteria.

The DoE indicated that al bids should be accompanied by a “bid guarantee” equal to R100 000 for every megawatt of installed capacity proposed. Further, prior to accessing the RF, prospective bidders would be required to make a non-refundable payment of R15 000 and to complete a registration form, which was available for download at www.ipp-renewables.co.za.

Meanwhile, three RFPs were also advertised over the weekend, relating to the feasibility study for a 5-GW solar power corridor, in the Northern Cape.

The tender advert was published by the State-owned Central Energy Fund (CEF), which had been given a Cabinet-backed mandate to manage the early stages of the proposed project and its first 1 GW phase, to be located near the sun-drenched town of Upington.

The RFPs advertised were for a feasibility study consultant, an environmental assessment practitioner, and for a geotechnical engineering consultant. The documents would be released electronically on receipt by the CEF of a R3 000 non-refundable payment.

The deadline for the submissions of bid for the environmental and geotechnical elements is August 11, 2011, while the potential feasibility consultants have until August 16, 2011, to submit their tender documentation.

Terence Creamer, www.engineeringnews.co.za/