South Africa Bets on Wind Power in Upcoming REIPPP Bidding Window

According to the International Energy Agency, power generation from wind in South Africa is expected to reach 81 trillion watt-hours by 2040. With an Integrated Resource Plan (IRP) based on least-cost supply and demand balance that aims to facilitate clean energy development, South Africa is seeking to attract investment – an estimated $2.65 billion per year by 2030 – from regional and international stakeholders to harness its wind potential. The upcoming fifth bidding window of the Renewable Energy Independent Power Producer Procurement (REIPPP) Program is expected to catalyze investment by offering bankable projects that target the procurement of an additional 1.6GW of wind energy.

With 33 wind farms at various stages of development throughout the country, South Africa boasts a total operational capacity of 2,020MW. Under its 2010-2030 IRP, South Africa aims to install 1,600MW of wind energy per year between 2022 and 2030, translating to a total allocation of 14.4GW determined by 2030 – more than any other resource in this period. Currently, wind provides 52% of renewable energy to South Africa’s national grid, in which the 140MW Kangnas Wind Farm, the 138.96MW Longyuan Mulilo Green Energy Number 2 North Energy Facility and the 138.23MW Loeriesfontein Wind Farm serve as some of the country’s largest contributors. 

“South Africa has got exceptional wind resources, confirmed by the Wind Atlas for South Africa (WASA) maps,” Ntombifuthi Ntuli, CEO of the South African Wind Energy Association (SAWEA), told AOP. “The WASA project has erected a total of 18 wind measurement masts spread across five provinces, which cover an estimated 75% of the country’s land cover. The wind map indicates average wind speeds of between five to seven miles per second and demonstrates great potential for the development of wind energy projects, not just in the coastal areas but also inland.”

Aiming to ensure long-term energy security, South Africa’s REIPPP Program establishes a framework for the development of wind projects, in which the opening of the fifth bidding window is expected to yield high wind energy rewards. With technological developments and steep downward price trends making wind an increasingly competitive resource, South Africa has recognized the value of the resource within the REIPPP. With the fourth bidding window resulting in four new wind projects coming online and an additional seven currently under construction, expectations for the fifth window are high.

“Bid Window 5 of the REIPPP will mark the rebirth of the wind energy industry, as the last bidding round was in 2014,” said Ntuli. “As per Ministerial determination, the industry expects Bid Window 5 to procure 1.6GW of wind energy – the largest capacity procured in one bidding window – and will enable the industry to stretch the economic development commitments, including local ownership, local content, job creation and socioeconomic development. The most important thing is that Round 5 will bring new additional capacity that the country desperately needs.”

The development of and investment into wind energy projects will yield both socioeconomic and environmental benefits. Considered a relatively reliable and consistent power generation source, wind can be utilized to ensure energy security and stability, as well as enable a larger-scale transition to clean energy sources.

“Investors who are looking to grow their portfolio of green investments should look at the wind energy sector,” said Ntuli. “We have many projects that have been under development over the last five years, with all the certification and authorizations in place, and that are ready for bidding in Round 5. Wind power is one of the world’s fastest-growing renewable energy sources and will become increasingly so as the technology advances. South Africa’s wind energy market offers investors certainty and long-term market visibility, as it builds on the back of the IRP. Our ballpark figure for required annual investment is R40 billion ($2.65 billion) per annum, so there is a massive opportunity for investors to be part of the solution of transitioning the South African power system from a carbon-intensive to a green one.”

As South Africa eagerly awaits the fifth bidding window, the SAWEA has a decisive message to potential investors currently looking at investing in South Africa’s wind industry.

“The wind energy industry is dependent on policy tones set by government. Over the past year, we have witnessed government making huge strides to close the policy gaps and give clear direction in terms of plans to procure new generation capacity,” said Ntuli. “The IRP allocation of 1,600MW per annum for wind energy is an indication of government confidence in the technology. Having gone through four bidding rounds over the past decade, the South African market has gone through all the teething problems associated with starting a new industry and is now ready for this growth phase. Therefore, there is no better time to invest in wind power than now.”

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