Wind industry welcomes presidential intervention plan for accelerated power

Responding to President Ramaphosa’s address (25 July 2022), the South African Wind Energy Association (SAWEA) applauds the numerous outlined interventions that the President and his team have set out to tackle the country’s energy crisis head on.

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Wind industry responds to NPC’s call to increase new power generation

Responding to the call by the National Planning Commission (NPC) to increase new power generation in order for the country to achieve energy security, the South African Wind Energy Association (SAWEA) has reiterated its position on the need for a comprehensive plan informed by energy experts and government stakeholders.

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We need a plan to fix our energy crisis – this is an emergency

Amidst the crippling power outages, the South African Wind Energy Association (SAWEA) is calling on the South African Government to lead the development of a comprehensive strategic plan to resolve the energy crisis and prioritise it with the same gravitas and urgency that it tackled the CV-19 pandemic. SAWEA believes that together, all stakeholders have the expertise to devise a co-ordinated response that will deliver a workable solution to mitigate this crisis that is a precondition to addressing the economic recovery.

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Wind industry welcomes presidential support of accelerated energy transformation

Responding to President Ramaphosa’s address on the budget vote (9 June 2022), the South African Wind Energy Association (SAWEA) applauds the President’s unequivocal support of the energy sector’s transformation. Furthermore, the industry welcomes the presidency’s clarity of the various reforms.

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Wind energy association unpacks complexities of procurement process

Responding to the announcements made last month delaying two renewable energy procurement rounds, meant to unlock and deliver new generation capacity for the country, the South African Wind Energy Association’s (SAWEA) Working Group for Policy and Markets has provided insights.

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Wind industry welcomes presidential support of accelerated energy transformation

Responding to President Ramaphosa’s address on the budget vote (9 June 2022), the South African Wind Energy Association (SAWEA) applauds the president’s unequivocal support of the energy sector’s transformation. Furthermore, the industry welcomes the presidency’s clarity of the various reforms.

Fundamentally, the Association points out that the reforms and work underway will deliver a robust, competitive energy sector with multiple generators competing to supply electricity at the lowest cost and selling power directly to customers, which will go a long way in supporting local business and South Africans individually. 

“This is a historical moment in our country as we are recreating not only our energy generation sector, but providing stable foundations for economic growth that is in line with the National Development Plan which sees 2030 as a time when South Africa will reduce its dependency on carbon,” commented Niveshen Govender, SAWEA CEO.

The President clearly outlined the work underway aimed at increasing the energy availability factor (EAF), and closing the electricity gap between generation and demand, which is the root cause of load shedding. These included ensuring that projects from existing procurement programmes, including Bid Window 5 of REIPPPP, reach financial close and are connected to the grid as quickly as possible; accelerating private sector investment in generation capacity under 100 MW; enabling Eskom to purchase surplus power from existing power producers; supporting municipalities to procure power independently; and encouraging households and businesses to invest in small-scale solar power installations and feed energy to the grid, amongst others.

“The interventions are in line with the RE sector advocacy efforts. We believe that this step change that we are experiencing will alleviate the impact of power disruptions and allow us to build back better. While these are ambitious intervention, strong leadership is required to move us forward,” added Govender. 

 The wind sector is excited by Cabinet’s approval of the appointment of Jacob Mbele as the new Director-General (DG) for the Department of Mineral Resources and Energy, as announced by Minister Mondli Gungubele, yesterday. On behalf of its members’ SAWEA welcomes Mbele, who is currently a Deputy Director-General for general programmes and projects at the department, noting that he has been intimately involved with both the Integrated Resource Plan and the procurement of electricity from independent power producers for many years, and wishes him well on his journey to drive and support the energy transition in a fair and equitable manner.

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Wind energy association unpacks complexities of procurement process

Responding to the announcements made last month delaying two renewable energy procurement rounds, meant to unlock and deliver new generation capacity for the country, the South African Wind Energy Association’s (SAWEA) provides insights.

June 2022

The sector in general, view the interrupted procurement as unfortunate, citing that this delays the achievement of investment, job creation and security of electricity supply that South Africa desperately needs. However, Chair of the Working Group, Kai Howie, notes that considering the complexity of the market and scale of the procurement process, it is understandable.

“We understand that these projects are complex and that given the chaos on the global manufacturing and logistics markets, as well as inevitable process delays, it is not entirely surprising that there has been a postponement to signing the agreements with the state utility and government departments, and achieving financial close where funds can be drawn down to fund the construction of these renewable energy projects,” says Howie.

BW5 preferred bidders are now expected to reach financial close by the end of next month, or late September 2022, pushed out from end-April, which was just six months after the bidders announcement in October last year. Whilst it isn’t certain which of the preferred bidders are earmarked for commercial close and financial close for the two allocated deadlines, as the discussions between the preferred bidders and Eskom are generally confidential, Howie explains that the original timeframe was actually very tight. He also explained the complexity around setting an ideal timeframe, considering the policies and pricing requirements.

“The ideal timeframe for these projects to reach financial close needs to be short enough so that pricing from suppliers and contractors can be as close as possible to the pricing that was bid on, and long enough so that all permits, consents, and the Eskom budget quote can be obtained as well as for all agreements to be negotiated and finalised,” explains Howie.

While six to twelve months may be an ideal timeframe, this is still challenging for preferred bidders considering the current international market conditions, which means that pricing cannot be locked in for significant periods. On the other hand, regulatory processes, for example, the water-use licence process, take months to complete, even with the assistance of the Presidency’s office.

Further addressing the policy and regulatory environment, Howie and his industry colleagues are looking at how processes can be adjusted to ease the pressure on IPPs.

“Firstly, the capacity of various government departments needs to be improved to ensure that requests for permits and consents can be processed as quickly as possible. Secondly, given the uncertainty and instability in the global manufacturing and logistics markets, placing full pricing risk on bidders is not conducive to projects reaching financial close. Finally, relooking at the risk allocation to ensure that there are not onerous terms which need to be passed down to suppliers and contractors could go a long way in ensuring that the projects reach financial close in a shorter period of time as this would simplify the negotiations significantly,” reports the SAWEA Policy and Markets Working Group.

The Group report that the cumbersome policy relating to commercial closure range across a number of departments, which are battling to issue permits and consents timeously. The sector has noted that the Department of Water and Sanitation has certain capacity challenges, which are being addressed to improve turnaround times.

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SA wind energy industry reaffirms commitment to energy security

May 2022

As the country bears the weight of continued load shedding, the South African Wind Energy Association (SAWEA), has reaffirmed the sector’s role in delivering energy security. This is despite the recent announcement of delays of two renewable energy procurement rounds meant to unlock and deliver new generation capacity.

Responding to a recent statement issued by the head of South Africa’s Independent Power Producer Office (IPPO), Mr Bernard Magoro, the Association says it is encouraged by the leadership demonstrated and the sentiments of stakeholder alignment. SAWEA has been lobbying for increased stakeholder engagement and alignment, as it is the key to establishing the foundation for accelerated procurement and unblocking hurdles.

“We continue to build relationships with the key stakeholders including the IPPO, Eskom, Department of Trade Industry and Competition (dtic) and Department of Mineral Resources and Energy (DMRE) and are assured that the stakeholders are having the right conversations to support the procurement process with the aim of more megawatts on the grid as quickly as possible,” said Niveshen Govender, CEO of SAWEA.

The South African wind power sector is robust and has the appetite, ability and capacity to deliver (at least) 1.6GW of new power generation per year, for the next decade. This has been demonstrated by exceedingly high levels of bid submissions for BW5 and reaffirmed by Magoro this week, who stated his confidence in the market appetite for the Renewable Energy Independent Power Producer Procurement Programme’s BW6. He noted that more than 50 potential bidders have acquired the bid documentation, and furthermore that the National Treasury has confirmed that the programme will continue to be granted government guarantee.

The Association points out that the sheer scale of these mega-projects, valued each on average over R1.5billion investment, require a slew of work to bring them to commercial closure. Commercial close is when the project agreements are signed, which is basically the achievement of the necessary power purchase agreement to sell electricity with Eskom and the implementation agreement with Government, which determines how Independent Power Producers (IPPs) will implement their projects and what economic development goals will be achieved.

“We are dealing with billion-rand projects that require in excess of sixty applications, licences, permit agreements, regulatory compliance processes, which demonstrates the importance of cross-sector stakeholder relations and supportive policies,” added Govender.

Citing the recent procurement round delay from end-April, the Association has pointed out that the failure to secure final budget quotes from Eskom for grid connection, shouldn’t be singled out as the only reason for postponements. It is suggested that a six to 12-month timeframe may be more realistic to navigate the cumbersome processes.

“I estimate around 12 months is a more realistic timeframe, which should be incorporated into the procurement process to reduce the public perception of delays, in addition to increased stakeholder engagement to resolve this,” reiterated Govender.

When asked about the comments made by the African Independent Power Producers Association Chairperson, SAWEA, has stated that it prefers to engage key stakeholders directly and work through the challenges in a constructive manner.

“South Africa can address fundamental challenges of energy access, energy security and climate change through the deployment of renewable energy. For this to happen, it is best that all stakeholders move towards working better together to achieve this,” concluded Govender.

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Wind energy industry celebrates new bid window for renewable procurement

The South African Wind Energy Association (SAWEA), together with the broader renewable power sector, are celebrating the Department of Mineral Resources and Energy’s (DMRE) announcement to open a new procurement round as another step towards addressing energy security and further stimulating the role of the wind sector in South Africa’s development objectives.

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Renewable industrialisation to unlock economic benefits for SA

The South African Wind Energy Association (SAWEA) and its sector stakeholders are advocating for the industrialisation of the renewable energy sector to extrapolate the enormous potential across the value chain, thereby unlocking both the economic power of the renewable energy industry and delivering broader benefits to the people of South Africa.

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