'It could have been even cheaper': grid a challenge as South Africa adds gigawatts more green power
Record-low average price under latest renewable auction but nation says better network infrastructure needed to unlock further improvements
South Africa awarded almost 2.6GW of new wind and solar projects delivering the lowest-cost power seen so far in a decade of renewable energy auctions – but admitted it could have been even cheaper if the nation's grid was in better shape.
The South African government selected 1.6GW of onshore wind and 975MW of solar PV projects as preferred bidders under the fifth window of its REIPPPP green power procurement programme.
The average fully indexed price of the power to be purchased under 20-year deals is 473.94 rand/MWh ($30.83/MWh) – 495.22/MWh for the 12 wind projects and 428.79/MWh for 13 PV plants – which the nation’s energy department said was the lowest since REIPPPP began in 2010.
However, the department added: “The average price would have been even lower if it was not for the grid constrains that prevented some of the cheaper projects from being selected as preferred bidders. More investment in grid infrastructure is a critical requirement to ensure participation by cheaper renewable projects in future, especially in those areas with higher solar radiation yield.”
The biggest winner in Window 5 was Ireland-based, Norwegian-owned Mainstream Renewable Power, which said it was awarded 1.27GW, or half the available allocation, across 12 wind and solar projects. The developer claimed it is now the most successful overall in REIPPPP with more than 2.1GW awarded.
Norway’s Scatec Solar also tasted success in the round with 273MW of PV across three projects.
Painful shift from coal
Outage-hit South Africa has already signed deals with 7.3GW of renewable projects after previous REIPPPP rounds, the majority of them wind and solar, as the country faces the challenge of overhauling its ageing power infrastructure and migrating state utility Eskom away from coal-fired generation – a hugely contentious transition given the central role of the polluting power source in the national economy.
Energy minister Gwede Mantashe said the government hopes to launch a sixth bidding window by the end of January next year at the latest, again targeting 1.6GW of wind and 1GW of PV and anticipating “more competition and reduced prices”.
Local industry body the South African Wind Energy Association (SAWEA) welcomed the swift follow-on round, given the delays that bogged REIPPPP down for several years and undermined its initial status as one of the world's most admired renewable energy programmes.
SAWEA chair Mercia Grimbeek said: “Consecutive bidding rounds will enable local manufacturing facilities to be re-established and the potential expansion of already operating manufacturers, which is crucial in creating long term sustainable jobs”.
SAWEA noted that “to enable the required quantity and quality of components will require at least two to three years of investment and development, reinforcing the need for rolling procurements, without interruptions or delays”.
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