Page 7 - Energize February 2021

COVER STORY

certain minimum dispatchability and flexibility requirements were achieved. The programme storage hybrids could result in the
also allowed for multiple facilities at different locations to bid as a single hybrid project. The optimal solution.
contracted capacity of these projects would need to be a minimum of 50 MW and a On the positive side, this
maximum of 450 MW to be eligible under the programme. programme has certainly pushed
By the final submission date of 22 December 2020, 28 bidders submitted their proposal many developers to step out of their
for consideration. Judging from the list of 28 bidders published by the IPP Office, the comfort zones and explore new and
programme managed to attract a diverse range of IPPs from smaller local developers to innovative ways to use and mix certain
some of the biggest international names in energy. The developers also represent a mix of technologies. We suspect that no two
renewable, thermal and power ship players. developers had an identical view when
it came to determining which
Flexible and forward-looking power procurement technology mix was the best fit to
Despite many differing views in the market, Wärtsilä believes that the RMIPPP represents a meet the RFP requirements and it is
balanced and pragmatic approach by the DMRE and the IPP Office to addressing South exciting to see what has to-date, only
Africa’s immediate and future power sector needs. existed in theoretical power system
The technology agnostic approach and allowance for non-co-located hybridisation models, now getting developed into
permits low-cost intermittent renewables to be combined with flexible dispatchable facilities real projects.
(such as reciprocating engines or battery energy storage solutions). This allows for a If proven to be successful, this
reduction in energy costs whilst ensuring that much needed power is delivered to the grid programme could make South Africa the
regardless of wind or solar conditions. pioneer for multiple mega-hybrid concepts
It is likely that the programme will result in a large amount of renewable capacity to be thus moving further away from the current
added to the national grid, but the intermittency caused by such renewables will be offset single technology way of thinking and
by new flexible power plants ensuring that system stability is maintained. moving in the direction of an open energy
This approach represents a new way of thinking as it places the priority on the system market which is in line with the
operator’s (SO) requirements and not on the type of technology to be implemented. This independent transmission system and
systems level thinking brings with it several advantages but importantly, it allows developers market operator (ITSMO) restructuring
the freedom to consider the latest proven and efficient technologies available globally. This currently underway at Eskom.
would effectively catapult the South African energy system out of the coal era and into the
“coal face” of modern power technologies, potentially catalysing previously unexplored Next steps and conclusion
investments into South Africa. The list of preferred bidders is expected
In line with the government’s plans to introduce more gas into the country, the RMIPPP to be announced by the end of March,
also required all thermal facilities to be able to operate on natural gas when available. This with financial close expected to take
forward-looking requirement may prove to be invaluable in securing the necessary anchor place four months later and construction
demand needed to justify future investment in LNG import infrastructure, thus kicking off the completed by end-2022. An extremely
much talked about “gas economy” in South Africa. ambitious target by any standard but
The permitted size range of the projects would, in Wärtsilä’s view, most likely result in one which should be supported as far as
10 to 15 projects to fulfil the 2000 MW capacity requirement. This approach significantly possible to help South Africa out of its
reduces the risk of construction delays and project cost overruns when compared to the current energy crisis.
implementation of a single 2000 MW “mega project”. This approach also has the benefit of If successful, this programme would
spreading economic growth and job creation opportunities throughout the country. not only help alleviate load shedding but
In the context of the socio-economic challenges the country faces, the RMIPPP places could also be a stimulus for the
a key emphasis on economic development. The programme has stringent, but achievable, introduction of new power technologies
requirements for local content, job creation and preferential procurement. All projects in the and the “gas economy’” in South Africa.
programme would also need to be newly built power plants, which ensures much needed Most interestingly though, it could result in
investment in South Africa’s power infrastructure. a fundamental rethinking in the way new
capacity is procured in South Africa. This
Positives and negatives approach to flexible procurement has so
In light of this new “black-box” approach adopted by the IPP Office, there were always far attracted the interest of the biggest
going to be challenges in designing an RFP which accepts all technologies without players in the sector but the real success
compromising or biasing some of them as was evidenced by the more than 1000 of this approach will only be determined
clarifications posed during the RFP process. Many comments were related to the stringent in the coming months as preferred
technology experience and testing regime requirements which made it challenging for pure bidders are announced and race to reach
renewable-plus-storage projects to qualify for the programme. financial close. n
Storage can undoubtedly play an important role in balancing inter-day renewable
fluctuations however, inter-day and seasonal balancing remains a challenge and therefore, Contact Wayne Glossop, Wärtsilä,
thermal capacity is still a sensible option for balancing these. For the flexibility requirements Tel 021 511-1230,
specified in this programme, Wärtsilä believes that a combination of thermal, renewable, and wayne.glossop@wartsila.com

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