The minister of mineral resources and energy, Gwede Mantashe, has announced the appointment of four preferred bidders under the first Bid Window of the Battery Energy Storage Independent Power Procurement Programme (BESIPPPP).

The minister explained that the site-specific BESIPPPP Programme Bid Window 1 is designed to facilitate the procurement of up to 513 MW from facilities that will provide capacity, energy and ancillary services to Eskom at 5 specified sites, therefore only one Preferred Bidder is appointed per site.

Subsequent to the release of the Request for Proposals in March this year, the department received 17 bid submissions in August 2023.

Following an independent evaluation of the bid submissions conducted between August and October 2023, the following four Preferred Bidders have been selected:

Project Name                         Substation

Oasis Aggeneis                       Aggeneis

Mogobe BESS                        Ferrum

Oasis Mookodi                       Mookodi

Oasis Nieuwehoop                  Nieuwehoop

Based on the outcome of the benchmarking exercise, the department will enter into further value-for-money negotiations to appoint a Preferred Bidder for the fifth site. This process is provided for in the Request for Proposals (RFP) process. An additional Preferred Bidder will be announced as soon as the value-for-money negotiations have been concluded.

The appointed Preferred Bidders have all made economic development commitments, even though such commitments were not mandatory for this BESIPPPP BW1 round.

The Preferred Bidders have committed to creating a total of 992 job opportunities for South African citizens (measured in job years), during construction and operations.

These projects will further spend over R3,2-billion on local content and over R4,4-billion on preferential procurement from BBBEE, black enterprises, QSEs and ESEs and on enterprise development initiatives over the lifetime of the projects.

The minister has also announced the signing of project agreements with an additional Preferred Bidder under the Risk Mitigation IPP Procurement Programme (RMIPPPP).

The department, together with Eskom, on behalf of Government, would sign project agreements with Mulilo Total Hydra Storage Project appointed as a Preferred Bidder under the RMIPPPP. The project with a total capacity of 75 MW to be located in De Aar, Northern Cape, offers a hybrid Solar PV and battery storage technology solution.

The project anticipates reaching Commercial Close by mid-December 2023, and will start the 24-month construction phase in early 2024. The new generation capacity should therefore be online from early 2026.

With the signing of this additional project, the total number of projects that have signed agreements under the RMIPPPP have now increased to six out of the eleven appointed Preferred Bidders, which will add a total of 428 MW of dispatchable capacity to the national grid.

The first two of the three RMIPPPP projects, Scatec Kenhardt 1, 2 and 3 with a combined total of 150 MW, that started construction in July 2022 have met testing requirements and reached commercial operation in November 2023, while the third project is expected to reach commercial operation early December 2023.

The Umoyilanga Project that signed project agreements in August 2023 reached financial close on 28 November 2023, and has now entered the construction phase.

The remaining 5 Preferred Bidders under RMIPPPP have until December 2023 to reach commercial close, and further announcements will be made in this regard in due course.

Status update on other IPP Programmes

Following the release of numerous bid windows launched under the IRP2019 determinations, the department has secured 1384 MW of new generation capacity that have achieved commercial and financial close and are currently in construction, or already in operation.

At least nine projects under Bid Window 5 of the Renewable Energy IPP Procurement Programme (REIPPPP) have now reached commercial close and are in construction. Three more projects are expected to reach commercial close in due course. In total, these projects will add a further 1234 MW to the national grid from 2025 onwards.

Moving to Bid Window 6, the six Preferred Bidders that were appointed in December 2022 are finalising all conditions precedent to reaching legal and commercial close. As previously communicated, the unavailability of grid capacity is a major constraint faced by all projects, resulting in delayed project closures.

The minister added that his department is in the process of finalising governance approvals for the release of the requests for the procurement of additional generation capacity under Bid Window 7 of the REIPPPP, Gas-to-Power, and Battery Storage.

He said that further announcements in this regard would follow within the next two weeks.