Cape Times 28 May 2012.
Price would remain the central determinant for choosing projects in future rounds of the renewable energy independent power producer programme, the Department of Energy said last week.
Energy Minister Dipuo Peters said most of the bidders that did not qualify in the second bidding window had been disadvantaged by their pricing.
“We are not going to take a development that wants to sell us wind (power) for R3 a kilowatt-hour when we are going to sell it at 50c,” she said.
Peters said it was important for energy sources to be affordable because the procured power would be sold to Eskom, which had also been tasked by President Jacob Zuma to make electricity affordable.
“It is not only about buying from the independent power producers (IPPs) but also whether it comes at a price that is okay for the market.”
Only 19 projects out of the 79 bids that were submitted in the second window of the programme were chosen.
In this window, price accounted for 70 percent of the assessment scoring, and 51 of the 79 bidders qualified on this metric. This helped bring the average price for the various technologies down compared with the first window.
The DA lambasted the department for choosing only 47 projects in the first two bidding windows, saying it was not possible that only these few projects were bankable. The party said the department’s IPP targets were very low.
The department has a target to procure 3 725 megawatts (MW) of renewable energy capacity from IPPs by 2016. Following the announcement of the preferred bidders for the second window, a total of 2 459.4MW has been allocated and only 1 165.6MW remains for the upcoming bids, plus 100MW for small-scale projects.
Peters said that although the country would make all efforts to diversify its energy mix and bring on stream untapped sources such as wind and solar, nuclear remained an essential component of the energy mix because South Africa had an energy-intense economy. “The success and deployment of nuclear power requires public acceptance and public education.”
She said radioactive waste management was the most important nuclear energy topic and the department would invest more resources and effort to address the issue.
But Kenneth Sinclair of Cope said the department needed to consider whether South Africa could afford nuclear as this was not the most cost effective energy source.
(Editorial note: It would be great if the same rigour, localisation requirements and cost criteria were applied to nuclear power procurement as is applied to renewable energy options. I doubt if ANY independent power producer would come forward to bid to build and run a nuclear power plant in South Africa or anywhere else in the world. Certainly not for R0.50/kWh!)