200 MW for concentrated solar thermal power in South Africa

Bidders in the independent power producer procurement programme for 3725 MW of renewable power must be having sleepless nights as they get their ducks in a row for the first phase of the programme, which closes on November 4. With more than a month to go before the end of the first bid phase, it is safe to say that the local renewable energy industry is, at last, open for business.

But for hundreds of local and international companies that want to be part of the programme, this is crunch time. In contemplation of the procurement process, many of these companies already have pipelines of renewable energy projects. The only question they are asking themselves is whether or not they are ready to bid.

The government has made it clear that companies which are not ready should not bother to bid or they could lose a lot of money in the form of the bid bond. Mark Tanton, MD of wind farm development company Red Cap Investments, says the prospect of losing the bid bond will force bidders to be more prudent and pragmatic.

The government has set aside 1850 MW for onshore wind power, 1450 MW for solar energy photovoltaic, 200 MW for concentrating solar power, 12,5 MW for biomass, 12,5 MW for biogas, 25 MW for landfill gas, 75 MW for small hydro, and 100 MW for small projects of less than 5MW.

Several industry experts have said there is sufficient interest in the programme. Happy Masondo, a director at law firm Werksmans, says it became clear from the bidders’ conference earlier this month that the world is interested in the local renewable energy programme.

The government organised the conference to discuss details of the procurement programme. It also served as a mechanism to gauge the level of interest in the local renewable energy industry. The interest that prospective bidders have shown so far puts paid to the pessimism seen when it became clear the government was getting rid of renewable energy feed-in tariffs (Refit), she says. "All of us are pleasantly surprised at the response to the bid," she says.

The switch from the Refit mechanism to a competitive bidding process has not dampened the interest of prospective bidders. Ms Masondo says said the tariffs that the National Energy Regulator of SA proposed under the Refit programme were generous.

"That is why there was a lot of excitement from the developers. It may be that the current competitive bidding process is more realistic," she says.

Some of the companies which want to participate in the bidding process are international companies "who recognise that, even with the changes, there is still a lot of money to be made".

Davin Chown, a director at Mainstream Renewable Power SA, says that while prospective bidders "generally understand the requirements", they still need clarity on certain aspects of the programme.

The requirement that the minister of agriculture must sign 20-year land leases for the projects to go ahead is a concern to the companies. Without the leases, the projects are not bankable, he says. His company, Mainstream, is among those that have been waiting for the procurement programme to get under way.

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