After numerous press releases about the impending release of the Coal Independent Power Producer Procurement Programme (CIPPPP), the Department of Energy (DoE) released a formal request for compulsory registration for new generation capacity under the CIPPPP on 25 June 2014.
Developers who wish to take part in this programme must register if they wish to submit bid responses once the Request for Qualification and Proposals is released. The Request for Registration is available at www.ipp-coal.co.za.
It is worth recalling the history. The DoE took the first major step in the liberalisation of the electricity sector in South Africa when it awarded preferred bidder status to a consortium led by GDF Suez for the procurement of peaking power generation capacity in 2008. This procurement process was finalised in 2013 when the DoE and Eskom signed two power purchase agreements for 1005MW of peaking capacity.
The DoE’s second step was to implement the procurement of renewable energy under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in August 2011. The REIPPPP has been successful for the DoE, developers, financiers and the country as a whole, but the the question remained: Was the DoE going to take the crucial step of procuring baseload generation capacity, which has historically been the exclusive domain of Eskom?
Department of Energy released a formal request for compulsory registration for new generation capacity under the CIPPPP.
In December 2012, the Minister of Energy put into motion the procurement of generation capacity allocation in the Integrated Resource Plan for Electricity 2010-2030. The baseload determination made allocations to coal, natural gas and hydro. The Minister indicated that the DoE would look to procure 2500MW of coal-fired generation capacity to “contribute towards energy security”.
In June 2013, the DoE took another step forward and released a Request for Registration and Information (RFRI) aimed at gathering information from potential developers of baseload capacity to assist the DoE in assessing the size, type and nature of the projects planned by developers, as well as the readiness of such projects. The RFRI served as notice of the DoE’s intention to proceed with the procurement of baseload capacity, and left the door open to the DoE to pursue direct negotiation with developers for the procurement of energy required on an urgent basis. This was a significant step but not big enough and the question as to whether the DoE would procure baseload generation capacity remained.
Following the issue by the DoE of the Request for Registration, we await the quantum leap to be made by the DoE in issuing the Request for Qualification and Proposals…now it’s not about “if” but rather “when”?