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South Africa to Publish Coal Power-Procurement Process This Year


Bloomberg News

Paul Burkhardt

Nov 21, 2014

South Africa plans to publish before the end of the year the process for independent power producers bidding to build new coal-fired generation capacity.

“We are currently finalizing the coal-procurement documents,” the Energy Department said yesterday in an e-mailed reply to questions. “We are expecting the bidders to bid the tariff and provide us with the estimated project cost.”

Africa’s second-biggest economy is struggling with a power grid under strain, leading to controlled blackouts this year. In April, then Minister of Energy Ben Martins announced additional infrastructure projects including 2,500 megawatts of coal-fired power.

“The bidders are expected to raise their own capital for the construction of the plant and Eskom will pay only for the energy produced,” the department said. “We will have sight of the total project cost at bid submission but it is premature to speculate on the price and the project cost at this stage.”

To contact the reporter on this story: Paul Burkhardt in Johannesburg atpburkhardt@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.netTony Barrett, Alastair Reed

New Procurement Procedures to Help South Africa’s Small Solar Developers


Solar Novus Today

Shem Oirere

September 22, 2014

South Africa has raised the hopes of small solar PV developers with projects of less than 5MW, after proposing a dedicated fund to enable them meet their capital expenditure.

The Department of Energy has also announced changes to the procurement procedures Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) to enable Small Independent Power Producers (IPPs) cut on costs.

The developers could soon find alternative funding after big lenders shunned them for larger projects under REIPPPP, which hopes to generate 1,450MW of solar PV by 2030. The 20-year $645 billion program is also expected to generate an additional 2,275MW from onshore wind, concentrated solar thermal, biomass solid, biogas, landfill and small hydro.

Reducing transaction costs

The fund for small renewable projects could be up and running by February next year, according to top government officials, for the  benefit of projects being developed under the Small Independent Power Producer Programme with a combined capacity of 200MW. No allocation has been given for each of the renewable energy technologies for this particular category of projects.

Energy minister, Tina Joemat-Pettersson, says the financing of projects with a capacity of less 5MW is a major challenge, but pledged government intervention in ensuring development of standard documents for the projects “to reduce transaction costs.”

She confirmed South Africa is working at a proposal for a dedicated fund to assist small IPPs with transaction costs.

“This will ensure that new entrepreneurs can also enter the renewable energy IPP market. I want to give the small IPP entities and developers the assurance that the fund will be up and running by February 2015, in time for the second round (of small IPP procurement).”

The fund will be established with the support of the German government-owned development bank KfW. The bank will make the funds available to the government on concessionary terms to enable beneficiaries to achieve their project objectives.

The Department of Energy explains that the Small Independent Power Producer Programme, whose first request for proposals was released in August 2013, is “to allow South African citizens who are, or who own or control, small or medium-sized enterprises (SMEs) and/or emerging, smaller power developers an opportunity to participate in the Renewable Energy generation sector”

The programme also affords South African power generation equipment manufacturers, “who may not have international certification the opportunity to supply equipment for the projects procured under the Small Projects IPP Procurement Programme.”

Effective implementation of the small IPP programme will also make it possible “to limit the cost‐at‐risk incurred by bidders through participating in the Small Projects IPP Procurement Programme in two stages.”

Reducing costs of procurement

Apart from the push for a dedicated fund to cushion small IPPs from high project costs, the government has also announced drastic changes to the procurement process to make it cheaper for the “little” developers to bring their projects on board within timelines.

Senior project adviser in the Private Public Partnership at the National Treasury, Karen Breytenbach, says the department of energy would make the changes before the fourth bidding round in November.

“To reduce costs incurred in submitting tender documents, the department would reduce the number of documents required,” she said.

“We are also going to change the request for proposal to make it less expensive for small IPPs to bid. We are looking at ways for bidders to submit their bids without going through sourcing support letters from banks.”

The amendments to the bidding process and proposal for fund for small-scale renewable energy projects come barely months after developers raised concerns over the requirement that they, too, be subjected to the high compliance costs under the department of energy’s REIPPPP for projects bigger than 5MW.

South African Photovoltaic Industry Association (Sapvica) Vice-Chairperson, Mike Levington, said in an interview with the Engineering News online magazine two months ago that lack of capacity in the debt market to fund smaller IPPs is a challenge because banks are not keen on them.

“Delays in the procurement processes, such as the delay in announcing the dates of the bid windows for the small-scale IPP programme, places financial strain on companies and small, medium-sized and micro-enterprises in particular,” Levington said.

The small IPPs were also subject to compliance costs that included the $4,923 that is payable to South Africa power utility Eskom for estimate letters, which gives details on how a particular project could be connected to the grid.

South African Renewable Energy Council chairperson Johan van den Berg said, “This relatively high compliance cost has a significant impact on the price that smaller projects require to be feasible.”

Until the pledge by the Department of Energy on changes to procurement of small IPPs is honoured, the project developers are subjected to the same application process like those constructing projects of larger capacity, which the industry stakeholders argue disadvantages them.

Levington said the proposed changes to RFP for the fourth round would “hopefully be extended to the small-scale IPP process in the future.”

Eskom had previously defended the estimate letter charges saying the utility has to recover its costs related to “detailed engineering, pricing and legal work to produce the cost estimates.”

“Between the first three bid windows (of the REIPPPP), Eskom processed in excess of 1,000 cost estimate letters without direct cost recovery from the potential IPPs and, therefore, this cost had to be recovered from all customers,” Eskom was quoted saying in a previous statement.

“Many of these IPPs eventually never submitted bids (for) the government procurement programme. Preparation of a cost estimate letter requires network planning and grid studies to be conducted and this is followed by a vetting process involving pricing and legal teams,” it said.

South Africa leading in PV development

Meanwhile, South Africa has now been ranked among the top 10 global leaders in solar PV development according to a July release by wiki-solar.org, which monitors deployment of utility-scale projects globally.

The country has deployed 15 solar PV plants with capacity of 503MW under the REIPPPP.  The projects include SolarReserve‘s 75MW Lesedi and 75MW Letsatsi in the Northern Cape and Free State provinces respectively.

Others are Norwegian-based firm Scatec Solar‘s 75MW Kalkbult solar plant near Petrusville in the Northern Cape, Globeleq consortium’s 50MW De Aar and 50MW Droogfontein solar plants near De Aar and Kimberley in the Northern Cape, US company SunPower‘s 22 MW Herbert and 11 MW Greefspan solar plants in the Northern Cape, which it owns jointly with Spain’s AMDA energy and South Africa’s Alt-E Technologies.

Separately, small rooftop solar PV installers in South Africa have also raised concern over the lack of legislation which hampers the growth of small and medium enterprises (SMEs) from deploying the technology to its full potential.

South African subsidiary of German solar PV mounting systems specialist,Schletter, said in July the Department of Energy should make changes to the legislation around the solar PV industry to enable that small power producers “feed power into the grid structure.”

The company’s South Africa head electrical engineer Mr Abdul-Khaaliq Mohamed said, “Grid energy management and metering must be upgraded and legislation should be revised to enable SMEs and property owners with rooftop solar PV systems to sell their excess power to the national grid.”

Mohamed said South Africa’s solar PV rooftop market is picking up in tandem with the growing number of SMEs and industries – this mainly as response to the increase in tariffs by the country’s power utility, Eskom and a desire to save more on electricity costs.

“If all SMEs strive to have solar PV cater for 20-30% of their energy needs this will reshape South Africa’s energy mix and make a massive difference to the country’s carbon footprint, thereby ensuring a sustainable energy supply for future generations.”

Written by Shem Oirere, a freelance writer based in Nairobi who specialises in renewable energy.

S Africa: renewables interest dampened by legal hurdles


Beyondrics, Financial Times

By by Ruona Agbroko

July 26, 2012

South Africa’s latest round of renewable energy contracts has attracted interest from European developers after home subsidies have dried up, but legal uncertainty and rules over local ownership may cut the temper their enthusiasm.

So far the third round of bids for solar and wind projects has seen some developers stop short of a full committment, which is hardly helped by government holdups.

The deadline for bids to supply another chunk of the 3,725MW of renewable energy that South Africa wants to cut its reliance on coal is October 1. From previous rounds, foreign direct investment in renewables is at $12bn in the year to May. There are two further bid rounds slated for April 2013 and July 2014.

DLA Piper Australia and its South African partner DLA Cliffe Dekker Hofmeyr have advised more than 50 per cent of the successful bidders in the first two rounds of contracts and are working with companies in their current bids. “The majority of the developers are European based, particularly Italian and Spanish, and there is an increase in interest from German, French, Chinese and US-based developers,” Damian McNair, head of finance and projects for Asia Pacific at DLA Piper told beyondbrics… Read more.

Company to deliver 1.2 MW biogas power generation plant


Engineering News

By Chantelle Kotzé

April 20th, 2012

South African electric equipment sup- plier Zest WEG Group, through its subsidiary company, Zest Energy, and in collaboration with an engineering, procurement and construction management contractor, has been awarded a contract by water and sanitation services provider Johannesburg Water for the delivery of a 1.2 MW biogas power generation plant.

“We have noticed a trend towards using biogas to generate power, and are proud to confirm our first biogas project with Johan-nesburg Water,” says Zest WEG Group sales and marketing director Gary Daines.

The contract, awarded in November last year, entails the supply of modular gas engines, as well as an integrated electrical system, which takes clean methane gas generated from the digesters within the water treatment facility and transforms it into electrical power.

The plant will initially generate 1.2 MW of power, but has the potential to produce increased power outputs, depending on the future availability of biogas. The plant will supplement the water utility’s current power supply and reduce its overall running costs.

“This is the first project of its kind and magnitude in South Africa and we hope that the successful commissioning of this project will lead to other munici- palities and water treatment facilities gaining confidence to support and implement this type of electricity generation project at their facilities,” states Daines.

He adds that an additional benefit for the company is that the project is based on a payback structure that allows for the capital costs of the project to be, in essence, paid back to the company over time, as it supplements its own power needs.

The company reports that it is currently installing the modular gas units that will be commissioned at the end of July.

Meanwhile, the majority shareholder in Zest WEG Group, Brazilian electrical equipment manufacturer WEG, has introduced steam turbines produced by its Brazilian technology partners to the South African market. This is as a result of similar power generation opportunities, already identified and brought to fruition in Brazil, being released in South Africa’s sugar and pulp and paper industries.

“We want to bring cogeneration to the South African market through industries that have excess steam for power generation, which can be generated into power and used to supplement electricity supply or to sell back to the grid,” explains Daines.

The company hopes to break into the independent power producer (IPP) market as a technology partner and supply these steam turbines to renewable- energy projects.

“Since IPPs have gained momentum, there are numerous opportunities to generate power from an array of sources, such as gas, hydro, wind and solar, and we should see IPPs develop at an incredible rate,” says Daines.

The company believes that it can gain valuable knowledge of green power technology from its Brazilian shareholder, WEG, as 85% of Brazil’s power is clean power produced through hydroelectric technologies.

Zest WEG Group says it is dedicated to skills training and has skills programmes in place as well as its own training facility and a dedicated training officer.

It is especially focused on skills training in maintenance and efficient long-term operations.

The company feels that there is a need to contribute to the skills within the country’s resource base and maintains that, if other organisations followed the same strategy and committed themselves to training small segments of the resource base, the skills shortage could be dealt with, Daines states.

Tanzania: Ewura CCC Urges Bunge to Probe Extractive Industry


AllAfrica.com

BY FINNIGAN WA SIMBEYE

February 9, 2012

THE parliament should continue pressing for access by its members to all contracts signed between the government and private investors in the extraction of natural resources to get rid of the problems that shroud the mining sector in the country.

According to the Chairman of Energy and Water Utilities Regulatory Authority Consumer Consultative Council (EWURA-CCC), Professor Jamindu Katima, most of the problems with contracts signed between the government and private firms in the extractive industry emanate from secrecy.

These contracts are top secret which not even parliament can access easily,” said Prof Katima who is also the Principal of College of Engineering and Technology of University of Dar es Salaam.

He said all contracts in the gas subsector need to be reviewed if proved to be faulty as was the case with Pan African Energy which faces accusations of evading taxes in the tunes of billions of shillings while inflating prices of gas supplied to Tanzania Electric Supply Company (TANESCO).

Apart from Songas and Pan African Energy, others companies extracting and supplying natural gas include Canadian Wentworth Resources and French Morel & Prom which are operating at Mnazi Bay in Mtwara region.

Lawmakers should continue to press the executive so that they can access all contracts and where necessary review them,” the Nobel Laureate said. Prof Katima who is a 2009 joint Nobel Laureate argued that Songas Limited may have signed another bad contract with Tanzania Petroleum Development Corporation which needs to be reviewed as its power tariffs to Tanesco are also excessive.

The don however warned against any attempt to undo such contracts. “I do not support severing such contracts because experience has shown that it becomes twice a burden to the public,” he pointed out naming Dowans Holdings Limited as the latest example…Read more.

Infographic: Which Countries Are Most Reliant on Libya for Oil?


Good Politics

As unrest continues to mount and conflict rages on in Libya, questions surrounding the North African nation’s oil exports remain in the air. The international Energy Agency said in March 2011 that the country’s oil production has “slowed to a trickle” as the fighting has prompted international companies to halt their operations and close ports.

What does this mean for the countries that receive shares of Libya’s typical daily output? Here’s a breakdown of which ones depend most on the turbulent but oil-rich nation.

Source: Good

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