A total of 53 bids, representing some 2 100 MW of potential capacity, were received by the Department of Energy (DoE) during the first bidding 'window' that closed on November 4 - the tender is for the procurement of 3 725 MW of renewable energy from independent power producers (IPPs) by 2016.

Director-general Nelisiwe Magubane said government was pleased with the response and indicated that the process had been designed with the possibility of having as many as five bid windows, with the next round currently due to close on March 5, 2012.

However, she also indicated that discussions were under way with the Department of Environmental Affairs, which was having some difficulty in processing all the environmental authorisations required for the next round. Therefore, the date might be adjusted to ease that constraint, as the absence of environmental approvals was seen as an immediate “deal breaker”.

Updating the media on the process, deputy director-general Ompi Aphane said that half of the offers related to wind projects, while 48% were for solar developments, both photovoltaic and concentrating. The balance of the bids related to small hydropower plants, and it was anticipated that the other technologies (such as biogas, biomass and landfill gas) might feature more strongly when the so-called small-projects tender was released later this year. This tender would have lower thresholds, but would only cater for projects that had capacities of less than 5 MW.

Should all the capacity currently on offer be developed, it would involve combined investments of around R7-billion, with more than half of the capital likely to flow from foreign direct investors. However, the evaluation process was still at the early stages, with the economic development aspects currently under consideration. Only once these criteria had been met would the bid price, which carried a 70% adjudication weighting, be considered. The 30% balance covered such aspects as job creation, local content, management control, preferential procurement, socioeconomic development and ownership – at least 40% of a project would need to be owned by South Africans to be considered as compliant.

The projects on offer were sited across all nine provinces, besides Mpumalanga, with most of the interest arising for developments in the Northern Cape, Eastern Cape and Western Cape provinces.

Aphane said the evaluation process was under way in a “secure” location and was being conducted by technical specialists with no direct association to the DoE and its officials. Once this evaluation was completed, it would be handed over to the department for adjudication.

The adjudication process itself would be subjected to an internal audit, as well as a review, which would be conducted by an independent, global auditing firm.

Preferred bidders should be identified by the end of November, or before the end of the upcoming global climate conference, which would take place in Durban from November 28 to December 9.

A six-month period would be allowed for developers to reach financial closure, which would include the signing of a power purchase agreement with Eskom. Aphane, thus, believed that the first capacity could start producing during 2012, with most of the capacity from the first bid window being introduced by the end of 2013.