First two coal IPP bidders named

Launched in December 2014, the programme is the first that allows the private sector to generate baseload energy using coal resources. This programme is rolled out through two bid windows.

Both bidders were selected as per the stringent requirements of the first bid submission phase, with all bids reviewed and evaluated by the IPP Office. The bidders will collectively add 863,3MW to the country’s grid in the next five years, which is set to begin commercial operation in December 2020.

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The two projects will use proven technology from suppliers with a track record of timeous delivery. With the collective backing of foreign developers from Korea, Japan and Saudi Arabia, the South African banking sector, including the Development Bank of South Africa (DBSA), the PIC and IDC, the two bidders already have a formidable set of partners committed to enabling their projects’ success, says the minister.

She also says that while these two projects will add much needed capacity to our national grid, they ultimately have a far greater role to play in terms of the overall value they will add to the sector. This value has been enabled through a strategic bid design – which saw participants required to have a minimum South African entity participation of 51%, black ownership of 30%, and a weighted B-BBEE contributor status of level five in respect of locally based shareholders, among others.

“The two coal IPPs will additionally unlock investment in much needed infrastructure and stimulate local procurement. While the over R40,164m of debt and equity funding committed to the projects demonstrates what the investors see in the coal programme space, the jobs created both during construction (6,613) and operations (13,524) will have a positive impact on surrounding communities."

Joematt-Pettersson emphasises that while South Africa’s energy build plan still incorporates the development of fossil fuel assets in the foreseeable future, the department is committed to transition to a low-carbon economy, with priority to be given to clean energy alternatives, subject to current technological and cost constraints. “We are already seeking ways and new technologies to use fossil fuels with minimal carbon emissions - the RFP for the second coal bid window is being reviewed to give consideration to the inclusion of clean coal technologies.”