The Department of Energy’s (DoE) highly anticipated Coal Baseload Independent Power Producer Procurement Programme Request for Qualifications and Proposals (RFP) has introduced concepts that we did not see in the Renewable Energy Independent Power Producer Procurement Programme. We highlight a few of these concepts:
The RFP provides for an Affected Project – these are potential projects that may experience difficulties in connecting to the relevant transmission or distribution system or obtaining water use rights. A bidder who owns an Affected Project and wishes to bring its project to the attention of the DoE can submit a response to Part D of the RFP. The deadline for submitting an affected project request to the DoE is 23 February 2015.
The RFP provides for an Ancillary Services Agreement (ASA) between a Project Company (as seller) and the Buyer (an entity so designated by the Minister of Energy). The ASA will provide for the provision of and payment for services which support the reliable and secure operation of the transmission system by the Buyer. The ASA will define the ancillary services that will be required from a preferred bidder’s facility.
Cross Border Projects
The DoE will, in due course, issue an addendum to the RFP that will enable a bidder to submit a bid response for a facility that is situated in a country other than South Africa. The RFP anticipates that this process will be conducted separately to the process for local projects.
A bidder will be obliged to submit a bid that provides information relating to the costs of decommissioning the facility and rehabilitating the project site upon the termination of the Power Purchase Agreement.
Economic Development Obligations
A bidder must have a South African Entity Participation of 51%.
Multiple Buyer Projects
The DoE will, in due course, issue an addendum to the RFP inviting bidders to submit bid responses for projects where the Buyer is one of two buyers of energy generated by the bidder’s project (Multi Buyer Projects). Although the principles detailed in the RFP will apply to Multi Buyer Projects, some of the qualification criteria may be adjusted in this addendum.
PB PD Undertaking
For the purposes of developing their project, a selected preferred bidder must submit an undertaking called the PB PD Undertaking to the DoE. The PB PD Undertaking commits the bidder to developing its project within the timeframes provided in the bid response. The PB PD Undertaking is a non-negotiable document in the form included in the RFP. The Department of Energy may call on a bidder’s bid guarantee if the bidder, having been awarded preferred bidder status, fails to provide the DoE with an executed PB PD Undertaking.