Picture: THINKSTOCK
Picture: THINKSTOCK

THE government’s plan to bring more power into the national grid through procurement from independent power producers (IPPs) has a hit a technical obstacle — Eskom cannot connect all successful projects from the third window of the renewable energy bid until the grid is strengthened.

The procurement of energy from IPPs is the quickest way to increase SA’s energy supply, which will be precarious for the next five years.

Both Eskom acting CEO Collin Matjila and Public Enterprises Minister Lynne Brown have emphasised the importance of IPPs in closing the power gap.

Eskom has successfully facilitated the connection to the grid of 21 renewable IPP projects from two earlier windows, which will provide 1,076MW.

Just more than 467MW of this is now available to the system. An additional 17 renewable projects were approved in round three, to deliver 1,456MW.

But growing congestion on the grid as more producers begin to feed in at different points, insufficient investment in the backbone of the grid, and a failure to consider in advance the technical difficulties of connection for some of the projects have led to the finalisation of round-three projects stalling.

Because of the technical difficulties with connection to the grid, several bidders have received quotes for connection that are far higher than Eskom indicated at the start of the bid process last year. This has led to disputes, with the result that many round-three projects are unable to reach financial closure, a prerequisite for construction to begin.

Department of Energy acting director-general Wolsey Barnard said in an interview on Wednesday that the problem was primarily "a technical one". It was not possible to know at the start of the bidding process which projects would be selected and which would be technically difficult and therefore also more expensive to connect to the grid, he said.

"The delay is caused by technical issues. As Eskom works with very tight budgets and a tight timeframe, if there is something that they haven’t had on the radar when the bids close, they can find themselves with too many bidders that are all technical problems for them," Dr Barnard said.

The department evaluates and selects projects, but connection to the grid and the purchase of power are handled by Eskom.

Dr Barnard said the difference between the cost of connection at the start of the bidding and the cost once all the information was available at the end, had led to "quotations which some of the bidders did not agree with".

South African Photovoltaic Industry Association chairman Davin Chown said the variation in the costs for preferred bidders were from 8% to 70%. Because bidders were selected on price, no account was taken in the selection stage of how difficult or practical it was to connect to the grid.

"The priority for South Africa, given the crisis we are in, should be to award the projects that are quickest to connect," Mr Chown said.

The understanding had been that bidders would do the "shallow reinforcement" of the grid at substation level and Eskom the "deep reinforcement" further up the grid. "Eskom are now saying they have to look for more money to upgrade some parts of the grid."

University of Cape Town Graduate School of Business professor Anton Eberhard said it was in the deep connections that the grid needed strengthening.

"Eskom hasn’t invested sufficiently in strengthening the backbone to evacuate power. It is an issue of lack of co-ordination in planning and Eskom not taking care around preparing for the IPPs," he said.

Democratic Alliance energy spokesman Lance Greyling said the urgency of connecting IPPs to the grid was underlined by the recent news that the performance of Eskom’s fleet had deteriorated badly.