South Africa has initiated a new round of bids under its Renewable Energy Independent Power Producer (REIPPPP) scheme. The government aims to procure 3,200 MW of wind power and 1,800 MW of solar power from independent power producers (IPPs) through the auction process, which will remain open until April 30, 2024

South Africa continues to experience devastating power outages, locally known as 'load-shedding,' largely because aging coal-fired power stations are unable to operate reliably. However, the country boasts excellent conditions for both wind and solar power, raising hopes that renewable energies can be a key part of the long-term solution to the energy crisis

As expected, the Department of Mineral Resources and Energy (DMRE) is looking for projects that can be quickly implemented. Bidders in the new round, the seventh under the REIPPPP program, must commit to being able to start generating electricity within 24 months of financial closure

The bidding round will be crucial to restore confidence among IPPs (Independent Power Producers). The previous round was a major setback for South Africa's hopes of attracting investment in renewable energies, as the government acquired less than a fifth of the new capacity it had planned

President Cyril Ramaphosa had originally announced in July 2022 that 5,200 MW of energy would be procured in the sixth bidding round (double the level of previous auctions). However, by the time the round concluded in December 2022, the government realized that the country's electrical grid would be unable to handle the planned capacity addition. In the end, contracts were awarded to solar projects with a combined capacity of only 860 MW, with no selection of new wind projects

Although the government is confident that it is now in a position to acquire new wind and solar capacity, the issues of network constraints are far from resolved

The DMRE is encouraging project bids in the provinces of Mpumalanga, Gauteng, KwaZulu-Natal, and Limpopo, where there is more available network capacity. However, the best conditions for large-scale renewable energy generation (especially for wind energy) are found in the provinces of Northern and Western Cape, where the grid cannot handle significant capacity additions

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