The most recent round of the Integrated Resource Plan (IRP) in South Africa saw fewer projects awarded than Round I. At first glance it did not look positive when only 9 projects, half the amount seen in Round I, were announced as preferred bidders by the Department of Energy.
The number of projects in Round II had dropped from 18 to 9, in addition to the overall power allocated across renewable technologies falling to 26% lower than in the first round, from 1,415.5MW to 1,043.9MW. The cut was a bit steeper for PV, which fell 34%, from 631.4MW in round I to 417.1MW in the second round.
Instead, what explains the fall in winning project numbers is that those given the green light have tended to be bigger in the latest round, with the average project size being 46MW compared to 35MW in Round I. Experts have argued that this increase in overall project capacity is the result of bigger projects being more competitive on a price basis.
"They award volume to the best proposal," states Paschal Phelan, chief executive of Solar Capital, the only company to have won bids in both rounds. "What is happening here is that you can build 70MW at a much more competitive price than you can build 7MW."
The Department of Energy has confirmed it received 79 bids across all renewable energy sectors in round II, and approved just 19 projects: 9 photovoltaic, 7 wind, 2 small hydro and 1 CSP.
Experts are arguing that Round II has shown that South Africa is always going to be a market for big players, as a result of the need for large volumes of power in this region. Phelan went on to summarize that "upwards of a thousand megawatts of PV will happen in South Africa because it is very good value and we need the energy. This is going to be about large installations."
As projects begin to move forward in Round I and II, the PV industry is set to meet at the PV Project Development Summit South Africa, on 3-4 September in Johannesburg. Leading developers are set to discuss the scaling up of projects in this region and the challenges that players are facing when developing plants of this scale. Confirmed participants include leading developers active in this region including Solar Reserve, Soitec, First Solar, Mainstream Renewable Power, Momentous Energy, BioTherm Energy, Juwi Solar, Gestamp Solar.
The event is set to take place on 3-4 September in Johannesburg. For more details about the summit go to the website: http://www.pv-insider.com/southafrica/