Gas to power bid window opens up

Eskom power lines. Picture: Henk Kruger/Independent Newspapers

Eskom power lines. Picture: Henk Kruger/Independent Newspapers

Published Jan 19, 2024


South Africa's gas to power (GtP) programme under the Just Energy Transition will give emphasis to coastal developments as the Port of Ngqura is set to retain 1 000 kilowatts of the 3 000 MW set in the energy plan.

Launching the gas to power procurement process to more than 500 bidders on Thursday,  Independent  Power Producer (IPP) head Bernard Magoro said the Port of Ngqura, in Gqeberha (Port Elizabeth), had been reserved 1 000 kilowatts while the balance of power would unilaterally be allocated countrywide to other bidders.

Magoro said the IPP would be working on tight deadlines as the gas component of the energy mix was a greenfield for the office and therefore would ensure it stuck with longer processes and stick to time lines.

The first bid window (BW1) of the Gas Independent Power Producer Procurement Programme (GIPPPP) stipulates that the facilities be located within the confines of the country.

“We have set 30th August for all application deadlines because gas is something we have not worked with before.

“It will take us three to four months to make our evaluations and we will allow six months for the financial loss. Construction of the projects should take 36 months so that the projects are operational with our time lines,” Magoro said.

A further 1 000 MW of GtP has also been specifically reserved for deployment in the Eastern Cape’s Coega Special Economic Zone, to be procured through a two-phase process that is expected to be launched before the end of March, when a request for qualifications will be published ahead of a request for proposals.

GIPPPP BW1 also limits bidders to the construction of greenfield facilities, ruling out the conversion of the diesel-fuelled Avon and Dedisa open-cycle gas turbines to gas.

Projects can, however, share infrastructure with existing facilities, but such infrastructure must have unconditional and irrevocable rights in the shared infrastructure.

Plants of between 300 MW and 1 000 MW in size will be considered and they will be expected to operate at a maximum load commitment of 65% and a minimum of 40%, with Eskom to dispatch the facility in line with an agreed monthly load commitment.

“We have set the 29th of February deadline for applications. Natural gas is a new area for us, which is why we need more time to make proper assessment, which is why we may take longer,” said Eskom’s Grid Access manager, Seetsele Seetswane.

As the norm with other public procurement programmes under way for renewables and battery storage, a 90/10 evaluation methodology will apply for the GIPPPP, with 90 points for price and 10 points for the economic development aspects.

While economic development components are not a qualifying criteria, compliant projects must include 49% South African entity participation.

Bidders are also required to provide detailed term sheets with their natural gas suppliers, detailing the origin of the fuel, the delivery point, as well as confirmation that the supplier has sufficient gas for the 20-year duration of the facility.

The briefing noted though that South Africa’s inaugural 2 000 MW GtP procurement round is limiting the development of facilities in the City of uMhlathuze, where KwaZulu-Natal’s deep-water Port of Richards Bay has been earmarked as a future gas hub, to 1 000 MW – a threshold that will be breached only if the remaining allocation is not taken up elsewhere in the country.