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South Africa

South Africa

Wind wins 634MW from renewables IPP

SOUTH AFRICA: The South African government kept its promise and announced the preferred bidders in the first round of its renewable-energy independent power producer (IPP) programme during the global climate negotiations in Durban last month. Wind won almost half of the contracts.

The programme is a central plank in the country's energy strategy, aiming to procure up to 3.73GW of renewable capacity by 2016.

Out of 53 bids with a combined capacity of 2.1GW received in this first round, the government selected 34 projects totalling 1.4GW. Wind accounted for roughly 45% of this, with 634MW spread across eight projects, putting it just ahead of concentrated solar power at 632MW and a long way clear of photovoltaic at 150MW.

Bidders have until 30 June 2012 to reach financial close and sign a power purchase agreement with state-run utility Eskom. Projects must be online by mid-2014.

Bids were assessed first on economic aspects, including local ownership, black empowerment, community development and local manufacturing propositions.

They also had to fulfil various environmental criteria and be technically viable and financially sound, while remaining beneath the wind-energy price cap of ZAR 1,150/MWh ($139/MWh).

The assessment took place under strict security to avoid accusations of corruption that have surrounded other procurement processes in South Africa.

Next rounds

The next two bidding rounds under the IPP programme close on 5 March and 20 August 2012, with two further rounds expected in 2013. Overall, the programme seeks to procure 1.85GW of wind power, though this may be increased if other technologies fail to reach the capacity allocated to them.

At the same time, the government is looking at how best to fund its renewables roll out while still keeping electricity rates affordable. One option being considered is some sort of renewable-energy fund which the Department of Energy says could channel foreign donor assistance and concessionary finance contributions into a central facility that would then grant funds at lower rates to individual projects.

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