Work set to start on three new wind farms

Construction on three new wind energy projects totalling 420MW “will start imminently” after developers signed agreements with Eskom and the government on Thursday.

The three projects are all being developed by French energy company EDF Renewables, a unit of partially stateowned EDF Group. These projects are among the 25 preferred bidders under bid window 5 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) that were announced in October 2021.

In this round, the minerals & energy department’s IPP office bought 2,580MW of wind and solar power.

Speaking at the signing ceremony, Tshifhiwa Magoro, head of the IPP office, said the round attracted 102 bids, totalling 9,600MW.

The signing of 20-year power purchase agreements with Eskom and the agreement about economic development and local procurement with the department for the 25 successful bidders had been scheduled for April. But a delay from Eskom in the issue of budget quotes saw the deadline move from April to July and then September.

The projects now have 60 days to reach financial close — the final hurdle to be crossed before building can begin in earnest.

One of the wind farms will be built in the Eastern Cape and the other two in the Northern Cape

— they are all relatively close to each other. As part of the development, EDF is building a new substation (to be handed over to Eskom after completion) that will be used to connect the wind farms to the grid.

Magoro said they now hoped to sign the necessary contracts with the outstanding 22 bidders from bid window 5 before the

end of October. Magoro said work had been done to streamline the projects’ approvals process and the drawing up of agreements.

The three EDF projects will cost about R11bn to develop, said Tristan de Drouas, CEO of EDF Renewables.

According to Magoro, once these projects had reached financial close, building the wind farms would take about 24 months, which means they should start feeding power onto the grid by December 2024.

This was the first bidding round to be held in seven years after Eskom refused to sign power purchase agreements with projects procured in 2014.

So far, the projects selected under bid window 5 have come in at far more competitive prices per kilowatt-hour than previous rounds. But one of the concerns with many of the bids has been that developers would not be able to deliver projects at the rate quoted in their bids because of soaring input inflation and supply chain disruptions, which have occurred since the bids were first submitted.

The projects for bid window 5 were bid at an average tariff of 43c/kWh. EDF’s bid came in at 60c/kWh and it said on Thursday it was confident the project could be delivered at this tariff rate.

Local content requirements have posed a challenge for developers participating in the REIPPPP. De Drouas said they were aiming, in line with the government’s requirements, to spend 40% of the total project development budget with local suppliers, but he added that this was “quite a challenge”.

There are no turbine manufacturers in SA, but other building materials will be sourced locally, he said.

In the energy crisis response plan announced by President Cyril Ramaphosa in July, to deal with load-shedding in SA, there was an acknowledgment of the challenge posed by local content requirements in the REIPPPP.

420 megawatts will be supplied by the wind farms R11bn the cost to develop the projects, says the EDF Renewables CEO