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The Risk Mitigation Independent Power Producer Procurement Program seeks to respond to short-term power supply gaps.
- The Department of Mineral Resources and Energy held a conference of the Independent Power Producer Procurement Program for Hazard Mitigation to inform energy bidders.
- As Eskom continues to grapple with its operational challenges, South Africa in 2020 has had its worst cargo loss year on record.
- The final result of the bidding process must provide power, capacity and ancillary services to Eskom.
As Eskom continues to grapple with its capacity issues, the Department of Mineral Resources and Energy launched a bidding conference to help find bidders to help with the country’s energy constraints by July 2022.
This comes as Eskom and South Africa have had their worst year of load shedding on record and the penny falls in the power company’s capacity, after it had to implement load shedding in an economy that was only partially functioning during shutdown. National Covid-19.
The Risk Mitigation Independent Energy Producers Procurement Program seeks to respond to the short-term energy supply gap identified in the 2019 Integrated Resource Plan and the ministerial determination of 2000 MW published in July, with which the National Regulator de Energía de SA (Nersa) agreed, paving the way to acquire a possible capacity of 11,000 MW from 2022.
The department said in a statement that at the end of the process, the final solution of the bidding process should provide power, capacity and ancillary services to Eskom.
“The conference was attended by more than 1,000 delegates, including registered bidders and other stakeholders, project developers, financiers and stakeholders from the energy sector,” the statement read.
In a speech during the virtual bidders conference on Friday morning, Eskom’s IPP Office Chief Bernard Magoro said the office came up with the technology diagnostic solution that seeks to prioritize developing a solution that meets the needs Eskom as an energy operator.
“As a bidder, you should take into account that there will be no possibility to charge for your storage facilities. If you design a facility that depends on storage, both the capacity and the storage must be in one place,” Magoro said.
Magoro said that 95% of the prices included in the program will be based on the energy provided and 5% will be based on auxiliary services. Empowerment will be directed with a local content threshold of 40%, including locally designated services, he said.
“For those considering gas engines and turbines, keep in mind that to align with the government’s strategy, their technology must take LNG as part of the capacity,” Magoro said.
Magoro said that bidders had until October 15 to submit questions seeking clarity on the bidding process, after which bids would be received starting October 30.
The presentation of offers will be taken until November 24 strictly by physical delivery with Covid-19 protocols at the IPP offices. Bid submissions will be considered through November and successful bids are expected to be announced in January. Power is expected to be available by June 2022.
Magoro said the Office of IPP worked with Nersa, the Department of Environmental Affairs, the National Treasury, the Department of Mineral Resources and Energy and the Department of Commerce, Industry and Competition to ensure that successful offers meet the requirements.
“At the IPP office we are working closely with Nersa, the departments involved and Eskom to help ensure that license authorizations are needed for this program before they are required.
“The design of the program was based on the requirements of the system operator. That was the main characteristic of the technical aspects of the program. All of this emanates from what the system operator indicated was the network requirement,” he said.
The head of legal affairs for the IPP Office, Lena Mangondo, said that the 2019 IRP would guide the acquisition through the process and establish the department’s competence to implement risk mitigation and decide how this program is carried out.
“The department must comply with the preferential procurement policy framework law in terms of evaluation and exemptions. The department asked the finance minister for an exemption and deviation from the trade, industry and competition minister,” Mangondo said.
Mangondo said that if a preferred bidder does not comply with their agreement, they may be terminated and lose their preferred bidder status without obligation on the part of the department.
“Once bidders qualify, they can proceed to benchmarking and competitive evaluation. They will sign a preferred bidder development commitment to determine business closure and enter into a variety of project agreements, including a power purchase agreement with Eskom.” Mangondo said.
Southern Africa Development Bank technical director Pervelan Govender said the power required for a preferred bidder’s program will be between 50MW and 450MW of power.
“The facility must include plant and equipment, be on green land or clear land. If a bidder brings in more than one facility, at least one of them must be a dispatchable facility,” Govender said.
Eskom’s network access unit regional manager Nonhlanhla Miya said that in order to gain access to the network, bidders must start by paying a processing fee and collect and complete an application form from the Eskom unit office. network access.
“Once the feasibility studies are carried out at the generation facility. They can enter the network access website to start their application form to access the network. The form is sent to the corresponding regional office of the unit. “Miya said.
Miya said engineers will compile an engineering proposal with a design to indicate the bidder’s project capability and then a process letter will be sent to IPP and Eskom will need to approve the designs and scope.
Senior Project Manager from IPP’s office, Elsa Strydom, said the cost evaluation process in the program will assess price, price strength and model robustness.
“There is no appraisal price cap, but the price makes a significant difference. A bidder must include bid connection costs, carbon details, non-fuel based freight rates, and freight charge. Fuel should be adjusted monthly based on the rates provided, “Strydom said.
Strydom said that the evaluation price should enhance the value for money for the buyer and the seller and that a benchmarking exercise will be used to ensure that the evaluation result is profitable. He said a “best and last offer” process may be included at the discretion of the department.
Acting Director of Economics for the IPP office, Deon Fourie, said the program includes economic development requirements such as skills development, job creation, transformation and local content.
