Pretoria: In an ongoing effort to ensure energy security and reduce the cost of electricity, Electricity and Energy Minister, Dr Kgosientsho Ramokgopa, has announced the appointment of five preferred bidders under the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP) Bid Window 3. These preferred bidders are expected to make a total investment of R9.5 billion into the South African economy.
According to South African Government News Agency, the Battery Energy Storage Programme is a critical initiative aimed at enhancing South Africa's power system by providing essential ancillary services and increasing grid capacity through energy storage. Dr Ramokgopa emphasized the program's importance at a media briefing, stating that the initiative is intended to serve as a "peaker" to assist during peak hours, reducing reliance on open cycle gas turbines and diesel. The program seeks to utilize excess generation capacity stored during daylight hours, which can be discharged as needed.
BESIPPPP Bid Window 3 is a site-specific procurement round designed to facilitate the procurement of up to 616 megawatts (MW) from facilities that will provide capacity, energy, and ancillary services to the National Transmission Company of South Africa (NTCSA) as the buyer, at five specified sites in the Free State supply area. Dr Ramokgopa highlighted the program's role in achieving energy security and reducing electricity costs. The combination of solar biological photovoltaics, wind, and storage capacity aims to flatten the cost curve of electricity, benefiting both households and industry.
The department received a total of 33 bid responses on 28 November 2024. The BESIPPPP BW3 round was found to be highly competitive, with a marked increase in the number of bids relative to previous bid windows, resulting in a 40% and 8% decrease in the average evaluation price compared to Bid Window 1 and 2 prices, respectively.
The five preferred bidders have made several commitments, including a minimum of 40% black shareholding in the IPP Project Companies, up to 30% black shareholding by construction contractors, and up to 42% in operations contractors. Additionally, the project is expected to create 852 job opportunities for South African citizens, measured in job years, during construction and operations. Local content spend is projected to exceed R3.7 billion during construction and operation phases.
Furthermore, the preferred bidders have pledged over R3 billion for preferential procurement from Broad-Based Black Economic Empowerment (B-BBEE) companies, R1.3 billion from black-owned enterprises, R1.1 billion from Qualifying Small Enterprises (QSEs) and Exempted Micro Enterprises (EMEs), and R562 million from black women companies. Supplier development, skills development, bursaries for black students, skills development for Black disabled people, enterprise development, and socio-economic development initiatives are expected to receive R184 million over the projects' lifetime.