The South African government has launched a Request for Information (RFI) to assess private sector interest and readiness to participate in a pilot tender for the planned Independent Transmission Project (ITP) program in 2025.
The RFI aims to gather insights on market interest, capabilities and potential solutions to accelerate the country’s transmission infrastructure development, with the latest development plan (TDP 2024) indicating the need to establish approximately 14,000 km of transmission lines and related infrastructure over the next 10 years. The deadline for responses to the RFI is February 28th.
RFIs assist in the design of effective procurement frameworks, inform the development of regulatory instruments, and guide the preparation of tender documents. It is available to all parties including private developers, financiers, development finance institutions (DFIs) and contractors.
Responses to the RFI form the final structure of the bid and play a critical role in the successful implementation of the ITP program. The RFI is being carried out by the Independent Power Producers Office (IPPO) on behalf of the Ministry of Electricity and Energy in collaboration with the National Treasury.
The Government is considering working with the private sector to expand and strengthen South Africa’s electricity grid through ITP, given the significant capital investment, capacity and expertise required to deliver TDP 2024.
Under this program, the private sector will be required to develop, design, finance, construct, operate and/or maintain designated transmission facilities during the concession period, after which ownership will be transferred to the National Transmission Company of South Africa (NTCSA).
The pilot tenders will target specific transmission assets, and lessons learned and results will provide guidance on future procurement and contracting models to be used for the government’s broader ITP objectives.
The RFP can be viewed here.
NTCSA officially began trading in July as an independent wholly-owned subsidiary of state-owned power company Eskom Holdings. It currently owns and operates South Africa’s electricity transmission system.
In late November, NTCSA announced that it had signed long-term contracts with 28 local companies to provide services for domestic substation construction. In August, the company signed long-term contracts with 19 local companies to be suppliers for overhead power line construction projects to accelerate infrastructure deployment.
Prior to this, in April, the transmission arm of state power utility Eskom signed contracts with 14 owner-engineer (OE) companies, paving the way for a multi-bid competitive bidding process in the TDP.
TDP 2024 will be announced in late October and will cover the period 2025-34. The plan projects capacity to increase from 66GW in 2024 to 106.5GW in 2034. This is an increase of 0.4GW from the previous TDP announced for 2022, which predicted a capacity increase of 106.2GW.
Based on network requirements, approximately 5,044km of transmission lines and 87 transformers need to be constructed from 2025 to 2029 (these include projects in the development and implementation stages). Capital expenditure for facility expansion during this period is estimated at R80.7 billion and renovation costs at R17.8 billion.
TDP 2024 can be viewed here.
In late December, the Ministry of Power and Energy announced that it had appointed eight bidders for a total contracted capacity of 1,760 MW under the seventh round of the Renewable Energy Independent Power Producer Procurement Program (REIPPPP).
The tender will open in December 2023 and is targeting a capacity of 5,000MW, comprising 1,800MW of solar photovoltaic (PV) and 3,200MW of onshore wind. A total of 48 bids were received, totaling over 10,218MW. This includes 40 solar projects and eight onshore wind projects in mid-August 2024. Of these, 30 solar projects and four onshore wind projects were assessed as compliant with the requirements of the Request for Proposal (RfP).
The eight bidders include the Egyptian/UAE developer Infinity Power and the local Pelle Green Energy team with six bids, the local Murillo, Raretile Renewables and Perpetua Energy joint venture, and the special purpose vehicle (SPV) consortium of Norway’s Scatec and Greenstreet & Redstreet.
Source: Department of Energy
The ministry added that it is considering nominating additional bidders for both.
Onshore wind and solar power are subject to price negotiations and reallocation of capacity under the tender framework.
The Ministry also announced that eight preferred bidders have been selected for the second round of the Battery Energy Storage Independent Power Producer Procurement Program (BESIPPPP) with a total investment of R12.8 billion. Developers include Mulilo, which submitted five bids, AMEA Power from the UAE, which submitted two bids, and EDF from France, which submitted one bid.
A total of 31 bids were received in late August 2024, with the aim of procuring a total capacity of 615MW/2,460MWh across eight locations in the North West, Gauteng and Free State regions.
According to the ministry, the second bidding slot for BESIPPPP was found to be highly competitive, with a significant increase in the number of bids and a 35% drop in the average assessed price compared to the first bidding slot.
The first BESIPPPP bid slot aims to procure up to 513MW of capacity across five sites in the Northern Cape and North West, with a team of three bidders appointed to deliver the project: Mulilo, EDF, Pele Energy Group and Gibb-Crede. Consortium of Scatec and Perpetua. and African Green Ventures.
Source: Department of Energy
Photo above: Power lines in South Africa (© John Hogg/World Bank | Flickr)
