Projects that were awarded under the relaunch of South Africa’s renewable power purchase programme have failed as they undermined plans to use wind and solar to ease the power crisis, according to government sources.
According to TechCentral reports, the economy faces daily planned power cuts due to regular breakdowns at power stations and ageing coal-fired plants.
One top government official directly involved in the renewables programme said, “We had celebrated when the tariffs in the fifth renewable round were announced, It would have been the cheapest renewable programme ever if all projects reached financial close.”
With the upcoming online auction, the government expects only half of the 2.6GW in capacity.
Ikamva Consortium, which is one of the six entities that won the bidding round. The company secured 12 of the 25 projects on offer. The same twelve projects that were awarded to Ikamva are the ones that have fallen through, according to a senior government official.
“The problem with bid window 5 was that we put all our eggs in one basket,” the second official said. “You can’t do projects at such low tariffs. It’s stupid.”
Ikamva’s six wind power projects never signed legal agreements following successful bids, the two sources said, while six solar projects failed to achieve financial close before a 30 June deadline.
The Ikamva Consortium includes Oslo-listed Aker Horizon’s Mainstream, South African billionaire Patrice Motsepe’s Africa Rainbow Energy & Power, local firm H1 Holdings and Globeleq.
Ikamva said that the higher interest rate, the increased cost of energy and the slower production of equipment post-pandemic is the reason for the fallout as it impacted its calculations.
In response it wrote, these issues “have inflated the construction costs beyond what the Ikamva Consortium … is able to absorb in the round 5 bid tariff.”
