Nearly half of the projects awarded under the relaunch of South Africa’s renewable power purchase programme have failed, undermining plans to use wind and solar to ease the nation’s energy crisis.
Regular breakdowns at state power utility Eskom ’s ageing coal-fired power plants means the country faces daily planned power cuts. President Cyril Ramaphosa has said South Africa needs to fill a 4000-6000 MW electricity production deficit.
Following a six-year hiatus, South Africa held a bidding round in 2021 for wind and solar projects that attracted proposals from over 100 firms and consortia.
A government official said: “This would have been the cheapest renewable programme ever if all projects reached financial close.” However, he said that the government now expects only half of the 2583 MW in capacity anticipated following the auction to come online.
Of the six entities that won the bidding round, one – the Ikamva Consortium – secured 12 of the 25 projects on offer. It is these projects, which Ikamva was awarded on the basis of low tariff bids, that have fallen through.
Ikamva’s six wind power projects never signed legal agreements following successful bids, while six solar projects failed to achieve financial close. Ikamva said that higher interest rates, the increased cost of energy and other commodities, as well as the slower production of equipment post-pandemic had impacted its calculations.
Other companies have found similar obstacles and, to date, just nine of the 25 projects have reached financial close.