South Africa’s sixth renewables auction concludes with lowest bid of $0.02689/kWh

South Africa's minister of mineral resources and energy, Gwede Mantashe, said last week that the five preferred bidders in the sixth round of the nation's Renewable Energy Independent Power Producer Procurement Program (REIPPPP) were all for solar energy projects. The ministry selected five solar plants with a combined capacity of 860 MW in the auction, with the final average price coming in at ZAR 0.49048/kWh, up 8% from the fifth round, when the average price reached ZAR 0.45423/kWh

The lowest two bids of ZAR 0.46050 were offered for two 150 MW solar plants in the North West province, while a bid of ZAR 0.48650 was submitted for a 240 MW facility in Free State province. Developers also offered bids of ZAR 0.49890 and ZAR 0.54000 for 200 MW in Free State and a 120 MW plant in North West.

“This is indicative of the global economic challenges experienced over the last two years resulting in increased input costs across the entire value chain,” the ministry said in a statement. “The total investment attracted through the five projects is ZAR 12.1 billion.”

The South African authorities had originally planned to allocate up to 1 GW of solar and 3.2 GW of wind power in the auction.

“The department received onshore wind bid responses amounting to 4,116 MW for the Bid Window 6, all of which are located in the Eastern Cape and Western Cape supply areas,” the ministry said, in reference to the unallocated wind capacity quota. “Following the confirmation from Eskom during the evaluation that no grid capacity was available to connect any proposed onshore wind projects in these supply areas, the department could unfortunately not award any of the wind projects up to the allocated 3 200 MW under this bid window.”

“It's a disappointing announcement from Mineral Resources and Energy Minister Gwede Mantashe for Bid Window 6 considering South Africa is about to conclude its worst year on record of loadshedding and just missed another opportunity to deploy both wind and solar PV projects at scale which are still the cheapest and quickest to build power projects in the country,” Chris Ahlfeldt, the founder of Blue Horizon Energy Consulting Services, told pv magazine. “It will be interesting to see how Eskom and government respond to the clear need for a coordinated approach to allocating grid access going forward as not all power projects are equal in terms of emissions, cost, supply profiles, or local socio-economic benefits.”

The fifth round of the REIPPPP scheme was launched in March 2021. Overall, the authorities allocated 2.6 GW of renewable energy capacity across 25 projects, ranging in size from 75 MW to 140 MW. The fifth round's lowest bid of ZAR 0.34425 was submitted for a 124 MW wind facility to be built in Hantam, in the Northern Cape region. For solar, the lowest price was ZAR 0.37479, which was offered for six 75 MW solar parks set for construction in Tokologo, an administrative area in the Lejweleputswa District of the Free State region.

The sixth and fifth procurement exercises are part of a plan to tender almost 12 GW of capacity. The latest round follows the recent publication of South Africa’s new Integrated Resource Plan (IRP). The IRP aims for up to 6 GW of new large-scale solar by 2030, as well as up to 6 GW of distributed-generation PV capacity.