South Africa has announced a raft of measures aimed at addressing the power problems in the Africa’s second largest economyÔÇöas some stray missiles have hit hard on the region, including Botswana. Outlining the new roadmap, which includes a suite of energy sources and speeding up of Independent Power Producer Procurement Programme, SA’s Minister of Energy, Tina Joemat-Pettersson admitted that energy security is both a regional and national issue due to supply and demand locational mismatches.
Joemat-Pettersson revealed that the electricity supply options will be derived from renewable resources, gas, coal and cogeneration.
“Resolving the energy challenge remains a critical element of the South African Cabinet’s list of nine strategic priorities to be pursued in partnership with the private sector and all stakeholders,” said the Minister.
“The South African Government is following a coordinated approach to the energy challenge, while ensuring that energy developments are maximising socio-economic development objectives, in addition to economic growth.”
Botswana is one of the hardest hit countries by the sneezing South Africa as it imports large quantities of electricity from Eskom, which is SA power utility. The problems are historical as Botswana Power Corporation (BPC), the government underpinned power utility relied heavily on cheap imports over the years and failed to expand Morupule capacity when the country had excess resources. Now they are paying the price for the failing P11 billion Morupule B power project. This was made worse by South Africa’s reluctance to strike a Power Purchase Agreement (PPA) with CIC Energy, which was developing Mmamabula energy complex for both export and domestic use.
Now South Africa looks set to remedy the problems with new energy supply and demand options that will increase the participation of Independent Power Producers (IPPs) to supply electricity to the grid as well as private participation in energy efficiency and demand side initiatives.
One such option is the Renewable Energy IPP Program, a flagship program of the Department of Energy (DoE) through which a total of 4 322MW have been procured in less than four years. Joemat-Pettersson said on 11th April 2015, the DoE issued confirmation letters to thirteen Preferred Bidders for the fourth bid submission phase of the RE IPP Programme. These projects, once completed, will contribute an additional 1 121MWs to the national grid.┬á?The move brought a total of 79 projects approved by the Department of Energy with a capacity of 5 243MW across all Renewable Energy Bid Windows.
“This represents a massive investment of R168 billion in economic infrastructures in our country, which will contribute to economic growth and job creation, in addition to the contribution it makes to security of electricity supply.”
The minister added that they will be issuing a Request for Further Proposals for an expedited procurement process of 1800MW from all technologies.
“This bidding process would be open to inter alia all unsuccessful Bidders from all previous Bid Windows (BWs 1 to 4) which are ready for re-submission. The Request for Further Proposal for this expedited procurement process will be issued by no later than early June 2015 and the IPP Office will release more details on the proposed process for this in due course.”
DoE has also developed Small Projects Programme which seeks to procure renewable energy from small-scale Independent Power Producers and it is also engaged in a process to design a Gas to Power procurement programme for a combined 3126MW allocation.
Equally, Coal Base load IPP Programme will procure 2 500MW of electricity from coal fired power stations with Bidders limited to bidding a maximum of six hundred megawatts (600MW) per project.
A number Botswana based coal explorers will punch the air at this move as a number of them are partnering with South African counterparts in a bid to qualify to export power to Eskom.
A number of coal companies are uncertain of the Trans Kalahari Rail Project (TKR) as governments of Namibia and Botswana could be reluctant to underwrite the huge risk on the project as costs keep rising.
“TKR needs to see someone wakes up in the morning to say I am going to do it,” Economist and Consultant at Econsult Botswana, Bogolo Kenewendo said at Afena Capital Press Club seminar recently.
“It is up to the leaders to decide what they want to do,” she said adding that as coal has a cycle, Botswana could benefit from rise in prices at completion.