South Africa announces preferred bidder for Risk Mitigation IPP Procurement Program

The Department of Mineral and Resources (DMRE) of South Africa has release announced the preferred bidders for the Risk Mitigation Independent Power Producer Procurement Programme and to provide an update on the procurement of additional power in line with the Integrated Resource Plan (IRP) 2019. 

The Bid Submission closed on 22 December 2020 and attracted a total of 28 bid responses with a potential contracted capacity of approximately Five Thousand One Hundred and Seventeen megawatts (5,117 MW). The Risk Mitigation IPP Procurement Programme succeeded in attracting project proposals featuring a variety of technology combinations.

The quantity and quality of the bid responses and potential megawatt of contracted capacity allowed for a competitive price evaluation.  All compliant bids were subjected to local and international benchmarking which is necessary to ensure that we receive Value for Money as required by the legislation. 

The evaluation process has resulted in the selection of 8 (eight) Preferred Bids totaling One Thousand Eight Hundred and Forty-Five megawatts (1,845) and a further 3 (three) Eligible Bids totaling One Hundred and Fifty megawatts (150 MW). The three Eligible Bids are subject to a value for money proposition in line with the provisions in the Request for Proposal. It is important to note that these Three bidders are within the Two Thousand megawatts (2,000 MW) capacity threshold in terms of the evaluation rankings, but their announcement can only be made following satisfactory value for money propositions.

It gives me great pleasure to announce the following eight Preferred Bidders in alphabetical order:

• ACWA Power Project DAO
• Karpowership SA Coega
• Karpowership SA Richards Bay
• Karpowership SA Saldanha
• Mulilo Total Coega
• Mulilo Total Hydra Storage
• Oya Energy Hybrid Facility
• Umoyilanga Energy

The solutions provided by these preferred bidders are from a combination of a range of technologies that include, Solar PV, Wind, Liquified natural gas, and battery storage. The prices for the proposed solutions range from ZAR1,468 per MWh (US$97.81 per MWh) to ZAR1,885 per MWh (US$125.6 per MWh). The weighted average price is ZAR1,575 per MWh (US$104.945 per MWh).

These eight projects will inject a total private sector investment amount of ZAR45 billion (US$2.99 billion) into the South African economy, with an average local content of 50% during the construction period. South African entity participation from these projects is 51% with black ownership at 41%.

The Preferred Bidders are required to reach Financial Close by no later than the end of July 2021. Due to the urgency to bring power online, this date is not negotiable. It is for the Preferred Bidders to manage all the risks to reach a financial close.

It is envisaged that the first power from these projects will be connected to the grid from August 2022.