South Africa Allocates 2.58 GW of Wind and Solar Projects in REIPPP Auction

South Africa has selected 25 wind and solar power projects to be developed by private developers under its renewable energy independent power producer procurement program (REIPPPP).

The projects amount to 2.58 GW of renewable capacity and are expected to bring in private sector investment of about 50 billion Rand (~$3.25 billion). The projects will provide 13,900 new job opportunities.

In March 2021, South Africa had floated the country’s fifth renewable energy bid to procure 2.6 GW of clean energy projects. Of this, 1.6 GW was to be sourced from wind and 1 GW from solar projects.

The Department of Mineral Resources and Energy of South Africa received 102 bids for 2.6 GW of renewable energy projects, including 63 bids for solar projects.

The department said the weighted average price of selected wind and solar projects is 473 Rand (~$30.73)/MWh. The weighted average price for wind projects is 495 Rand (~$32.16)/MWh and 429 Rand (~$27.87)/MWh for solar projects.

The tender required projects to use at least 40% domestic materials during construction to stimulate local manufacturing and production in the renewable energy value chain. The projects committed 44% local spending during construction. For the first time, the proposal required bidders to commit local content during operation. The preferred bidders undertook to spend 41% of their committed budget during operation towards purchasing domestic products and meeting requirements for local content.

The department said it has procured and signed agreements with 93 independent power producers for projects totaling 7.30 GW capacity. Of this, 89 projects are already connected to the grid and supply 6.85 GW of energy. These projects include 86 renewable energy projects, five small power projects, including hydropower, landfill gas, and biomass.

The selected bidders also committed a 2.7 billion Rand (~$175.67 million) for socio-economic development and enterprise and skill development initiatives over 20 years of the projects’ lifetime.

A total of 34.7% shareholding by black people in independent power producers was achieved against a target of 30%. The government requires participation by black South Africans at the project level and across the entire renewable energy value chain. The selected preferred bidders committed to 25% black participation in companies building the projects. While most of the sub-contracting will be during construction, the preferred bidders committed another 28% ownership by black South African sub-contractors during operation.

The department is likely to release the sixth renewable energy bid by the end of January 2022. It will include 1.6 GW of onshore wind and 1 GW of solar capacity.