South Africa's DMRE Announces 7,600MW Power Procurement to Alleviate Load-Shedding

The Department of Mineral Resources and Energy (DMRE) in South Africa is taking a decisive step toward mitigating the country's power crisis by launching three comprehensive requests for proposals under the Independent Power Producer Procurement Programme (IPP). These proposals aim to inject 7,615MW of new power generation capacity into the national grid, equivalent to an impactful reduction of approximately eight stages of load-shedding.

The department has made history by introducing the first government-supported bid for gas-to-power projects. This inaugural round targets the procurement of a substantial 2,000MW from land-based facilities. Notably, these projects can be established anywhere within South Africa's borders, providing flexibility for optimal siting and potentially catalysing regional industrial growth.

Amidst ongoing energy shortages, the DMRE additionally unveiled bid window 7 under the Renewable Energy Independent Power Producer Procurement Program (REIPPPP). This move calls for a pioneering 5,000MW of new generation capacity, including a mix of 1,800MW from solar energy and 3,200MW from onshore wind projects. These projects are required to be at an advanced stage of development, ensuring they can swiftly transition to construction and ultimately contribute to the grid within 24 months after reaching their commercial close.

Moreover, hot on the heels of announcing the initial winners for the country's first battery energy storage procurement round, the DMRE has now initiated the second round. This round is soliciting 615MW of energy storage capacity, which is to be distributed across eight facilities strategically placed near specific Eskom transmission substations in the Northwest Supply Area.

With the four aforementioned battery storage projects from the first bid window set to deliver about 500MW of capacity, expectations are high. These projects are on track to achieve commercial close by May 2024, signaling a significant step forward in energy storage integration.

Prospective bidders must consider the dynamic landscape of Eskom's Generation Connection Capacity Assessment for 2025. The assessment reveals approximately 20,000MW of available generation connection capacity scattered throughout several provinces. Interestingly, the most capacity is found in Mpumalanga, Gauteng, KwaZulu-Natal, and Limpopo, which contrasts with the three Cape provinces that, despite being ideal for wind and solar generation, no longer have available generation capacity.

Reflecting on past challenges, the DMRE previously aimed for 5,200MW of renewable energy generation capacity during bid window 6 of REIPPPP, but managed to secure only around 1,000MW of solar energy capacity and no wind energy capacity. The underlying grid access constraints in the Western Cape and Northern Cape, which are the prime regions for such projects, contributed to this shortfall.

In response, industry leaders like SA Wind Energy Association CEO Niveshen Govender recognize the importance of acknowledging grid capabilities to ensure successful procurement. Establishing clear parameters regarding grid capacity and remaining engaged with Eskom to tackle these critical issues remains a priority for the industry.

With the deadline for bid submissions settled on April 30, the DMRE has scheduled a conference for bidders on January 17 and 18. This event is designed to inform and clarify the qualifying criteria as well as the expectations regarding bid submissions, aligning all stakeholders towards a more energized and sustainable South Africa.