Independent power producer (IPP) Sonnedix, which reached financial close in December on a 86 MW solar photovoltaic (PV) project near the Northern Cape town of Prieska, expects to begin site mobilisation during the second quarter of 2015 and for the plant to enter commercial operations by the third quarter of 2016.
The project was among a group of 15 solar and wind projects to reach financial close under the third bid window of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), with two additional projects (one a landfill gas and the other a biomass project) expected to close in early 2015.
Once all 17 projects close, the number of REIPPPP projects that are either in operation or under construction across the country would rise to 64.
In addition, the Department of Energy (DoE) named two additional preferred bidders – the Kathu Solar Park and the Redstone Solar Thermal Power Project – under the so-called 3.5 bid window and reported that the identities of the preferred bidders for bid-window four would also be released in early 2015.
Sonnedix country manager for South Africa Olivier Renon tells Engineering News Online that the company, which has projects or operations in eight countries, remains optimistic about prospects for yet further South African projects, notwithstanding the grid connection challenges that emerged during the third round.
The connection challenges, precipitated partly by State-owned power utility Eskom’s financial constraints and partly by the fact that the easy-to-connect sites were absorbed in earlier rounds, delayed financial close for a number of months and raised doubts about the robustness of the REIPPPP, which had hitherto been hailed as a major success story.
Renon said Sonnedix had bid “a few projects” into the fourth bid window and that, while it was assessing other prospects in the rest of Africa, South Africa remained a priority market, owing to rising demand and the fact that it had an active renewables programme.
The company was keeping close tabs on Eskom’s financial situation, but was not overly concerned, mainly because the National Treasury is backing the Eskom power purchase agreement.
However, the connection risks will persist in future rounds unless a new formula is found. The current arrangement demands that preferred bidders offer a firm price and delivery date even when they are only able to secure an indicative connection cost and timeframe from Eskom.
“The DoE is acutely aware of the issues and is working to resolve them,” Renon reports.
The Prieska project itself was co-developed with Mulilo, which remains a minority partner. It is being supported with debt finance from Nedbank and Standard Bank, while Juwi Renewable Energies has been appointed as the engineering procurement and construction contractor.
Negotiations are still being finalised with a PV module supplier. The project will be configured as a fixed-tilt plant and will incorporate around 300 000 PV modules.
When the DoE released the names of the preferred bidders in November 2013, it reported that the six successful solar PV bidders would collectively develop more the 430 MW of capacity. It also reported that the fully indexed prices, using April 2011 as the base year, had fallen from R2.75/kWh in bid-window one to 88c/kWh in the third round.