South Africa's Renewable Energy Procurement Highlights Photovoltaic Growth

In the seventh round of the Renewable Energy Independent Power Producers Procurement Program (REIPPBW7) bidding in South Africa, the photovoltaic project won the bid for 1.76GW of capacity, becoming the government's preferred winning bidder. The winning bidder will sign a 20-year power supply contract, and it is expected that these projects will be commercially delivered in the second half of 2025.

It is worth noting that the 3.2GW onshore wind power originally allocated in the 5GW tender did not win the bid, making it the second consecutive round where photovoltaics became the only winner (and the 1.8GW capacity initially allocated to photovoltaics was not fully utilized).

The South African Department of Electricity and Energy stated that four onshore wind power projects totaling 932.4MW are currently under negotiation. These four projects, as "qualified bidders," are expected to become the preferred winning bidders in this round after cost-effectiveness negotiations and governance approvals. This reflects that the price of onshore wind power projects is higher than that of photovoltaic projects.

In addition, the government has approved the reallocation of onshore wind power quotas to photovoltaic projects, so that more eligible bidders can be included in the preferred winning bidder category, thereby increasing the final awarded capacity.

Although not enough winning projects were selected in this round of 5GW bidding, a total of 10.2 GW of active bidding applications were received during the bidding stage, including 40 photovoltaic projects and 8 onshore wind power projects. After independent evaluation, 30 photovoltaic and 4 onshore wind power projects submitted bids, and ultimately won the bid with a capacity of 1.76GW, all of which were photovoltaic projects. PeleGreenEnergy became the biggest winner of this competition, submitting 8 winning projects and ultimately winning 6. The winning bid price ranges from 420.74 South African Rand/MWh (approximately $22.71/MWh) to 492.20 South African Rand/MWh (approximately $26.56/MWh).

The winning projects are located in Mpumalanga Province, Limpopo Province, Free State and Northwest Province, with a total investment of 31.4 billion South African rand (approximately 1.7 billion US dollars), expected to create 6971 job opportunities for the local area. According to the bidding terms, 38.8% of the total cost will be allocated to local enterprises during the project construction period, equivalent to 7.8 billion South African rand (approximately 421 million US dollars), while 2.4 billion South African rand (approximately 129.5 million US dollars) will be invested in the operation and maintenance phase.

In addition, the government has also announced the eight preferred winning bidders in the second round of the BESIPPPPBW2 procurement plan for battery storage independent power generators, with a total capacity of 615MW. These projects will provide capacity, electricity, and ancillary services to the national power company Eskom at 8 specific sites.

These projects will become an important component of South Africa's efforts to promote energy diversification, reduce dependence on fossil fuels, and achieve energy independence. The country announced plans to purchase 14.77GW of new wind, photovoltaic, and energy storage capacity in January 2023.