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Myths and truths around South Africa’s recent renewable energy auction

Screen Shot 2021-11-16 at 12.28.50 PM

Source: Wikus Kruger, The Conversation, 10 November 2021, photo credit: CITI I/O

South Africa’s department of mineral resources and energy recently announced its choice of companies to build and operate a new “batch” of renewable energy projects. This is part of a programme in which the government invites private companies to compete for contracts to produce electricity and sell it to the national utility, Eskom.

In this most recent auction of contracts, known as “bid window 5”, 25 projects – 12 solar and 13 wind – totalling close to 2,600 MW of capacity got the go-ahead. These projects are expected to come online in the next two to three years. The contracts last for 20 years.

The power companies’ bids are scored mainly (90%) on the price at which they will sell electricity. The rest of the scoring (10%) is based on socio-economic development criteria.

Bid window 5 marks the end of a long gap in procurement of renewable energy. South Africa started the procurement programme in 2011, and over the next four years awarded 102 renewable energy projects totalling more than 6,300 MW. The programme was stopped in 2015 when Eskom’s leadership at the time refused to sign any more of these power purchase agreements.
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