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Structured introduction of renewable energy well on its way

17 January 2022 Renew Risk Africa (RRA)

South Africa’s energy crisis that has seen Eskom implement load-shedding can be resolved in a few years by a structured introduction of renewables, says Mike Robson, Managing Director of Renew Risk Africa (RRA).

The Integrated Resource Plan (IRP 2019) – South Africa’s Road Map for new energy – sets out how much new renewable generation will come online each round.

The 5th bidding window (BW5) was launched earlier this year in April by South Africa's Department of Mineral Resources and Energy with preferred bidders being announced in October 2021.

"Round 5 has once again been a success story: 38% more project bids were received compared to six years ago in Round 4, despite all the delays, tariff restructuring, and the Covid-19 pandemic," says Robson.

The Managing Director of Renew Risk Africa said well-known preferred bidders/developers have been chosen for Round 5 and expect to bring their projects to financial close within 4 to 6 months.

The bidders include Mainstream – 12 projects (six onshore wind projects (4 x 140MW & 1 x 124MW) and six solar PV projects (6 x 75MW), including the first Renewable Energy IPP Procurement Programme (REIPPPP) project in South Africa's KwaZulu-Natal province).

The other bidders are Scatec – 3 projects ( 3 x 75MW solar), ENGIE – 3 projects (3 x 75MW solar), Red Rocket – 3 projects (2 x 140MW & 1 x 84MW wind), EDF – 3 projects (3 x 140MW wind) and Mulilo – 1 project ( 1 x 75MW solar).

"One can expect contestation when the bids are awarded and rather than get bogged down in litigations, the government can be assisted to efficiently introduce the desired amount of renewables in its envisaged energy mix," says Robson.

The Round 6 and 7 bid process is expected to launch in early 2022. As much as 8 000MW (wind) and 6 000MW (solar) will be allocated leading up to 2030.

"The expected decommissioning of aging coal power plants can be seamless if renewables are introduced in a structured manner that will help Eskom avoid load-shedding," says Robson.

In another related development, Renew Risk Africa (RRA) - Africa’s first and only niche underwriting manager solely insuring renewable energy projects - has introduced an exclusive and bespoke insurance facility to cater for the REIPPPP.

Known as the “Renew Risk Africa Bespoke IPP Insurance Solutions” It will ensure that developers and brokers in South Africa will have access to sufficient capacity for all local projects while gaining the benefit of lessons learned in other markets to reduce risk to their projects.

"The bespoke insurance offering, only available to renewable energy projects under the REIPPPP/IRP 2019, offers a tailor-made composite 'Cradle to Grave' seamless insurance," says Robson.

"The exclusive IRP 2019/REIPPPP offering will boast a total capacity available of up to USD500m for any one project."

Renew Risk Africa and its long-time reinsurance partners GCube Insurance, London, and Axis Capital, London, have expanded to include RSA and Markel.

"Whilst having been involved in all facets of the REIPPPP since its inception in 2011, RRA and its partners have jointly concluded the need for a long-term sustainable insurance solution to solely and exclusively address the requirements of the REIPPPP/IRP 2019," says Robson.

Quick Polls

QUESTION

There are countless articles written about South Africa’s poor retirement outcomes. Which of the following would you single out as the biggest contributor to local savers not accumulating enough to buy an adequate and sustainable pension?

ANSWER

Lack of personal accountability
Poor participation in formal retirement funds
Reluctance to seek financial advice early on
SA’s high unemployment rate
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