Time is running out to save 23 rejected wind energy projects

The South African Wind Energy Association (Sawea) wants international experts to help rescue the 23 wind power projects that failed to achieve preferred bidder status in the sixth bidding window of the government’s Reippp (Renewable Energy Independent Power Producer Procurement) scheme.

R100 million already invested

Bidders have invested a total of around R100 million in these projects, only to be left out due to a lack of connection capacity in Eskom’s transmission grid in the Northern, Eastern and Western Cape.

This came as a shock as they had relied on Eskom’s Generation Connection Capacity Assessment published in March 2022 and indicated that there was sufficient capacity.

The first paragraph of the document reads: “The Transmission Grid Generation Connection Capacity Assessment 2024 release (GCCA-2024) aims to inform stakeholders about the potential available capacity in Eskom’s transmission grid to facilitate the connection of generation projects.”

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What Eskom COO Jan Oberholzer admitted in an interview with Moneyweb editor Ryk van Niekerk on RSG Geldsake on Monday (January 23) was a communication error, the connection points were not reserved for the bidders and the login details were not updated regularly either.

In the meantime, projects to generate electricity for private customers have exhausted all available capacities and overtaken the bidders in the public procurement process.

This resulted in only five solar projects – with just 860MW of combined generation capacity – being announced as preferred bidders.

This comes after President Cyril Ramaphosa increased the initial bidding round from 2,400MW to 4,200MW to add power generation capacity to the grid to handle load shedding in July last year as part of his energy contingency plan.

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Peter Attard-Montalto, who is responsible for political economy, markets and the just energy transition at Intellidex, wrote on his i-blog: “The failure of the REIPPP bid window 6 at the end of 2022 means that the plans are now 3 GW behind where we else are should be, with Bid Window 7 also looking deeply problematic. Essentially ending load shedding by the end of 2024, which seemed possible last year, is now impossible.”

According to Eskom, all available connection capacity in the three Cape provinces is occupied, which would mean that all investments in these projects would be wasted. They have been positioned where wind resources are best and cannot be relocated to other locations.

Sawea CEO Niveshen Govender says the industry is asking for the appointment of a consultant with experience managing constrained networks to advise Eskom on integrating these projects into the network.

He notes that countries in Scandinavia, as well as Australia and the State of California in the US, have dealt with the same challenge and South Africa can learn from them. “The hardest part will be getting Eskom to agree and share the information.”

Govender adds that industry is willing to foot the bill. If Eskom agrees, it can be done within six months, he says.

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Time is of the essence

The time frame is important because the permits for the 23 projects, including the environmental permit, are only valid for another year. After that they expire and time and money were wasted.

Possible solutions are grid sharing between solar and wind projects.

“Solar power is generated during the day and wind power mainly at night. Internationally, it has been found that there is only a 7% overlap,” says Govender.

“Managing such a network is complex, but not impossible,” he adds.

Govender says it’s also worth exploring the possibility of connection to the distribution grid rather than transmission. “Germany has overcome the limits of its transmission grid with roof solar.”

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Sawea also wants to determine where funding will come from for the R72 billion investment in the transmission grid that Eskom says it will need over the next five years.

In this regard, Attard-Montalto writes: “The Offers Window 6 debacle further underscores that we are not paying enough attention to transmission and that the R72 billion in transmission investment required over the next five years is far from being achieved. This creates a hole in the ability to bring enough energy to the grid in 2024-2027 – which in turn further delays the end of load shedding.”

According to Govender, Eskom’s queuing system for network access must be fair and transparent to prevent a repeat of the Bid Window 6 shock.

“Currently nobody knows how it works.”

Projects targeting private procurement should not be allowed to overtake those for public procurement, he says.

This article originally appeared on Moneyweb and has been republished with permission.
Read the original article here.

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