The coal RFP released in December 2014 by the Department of Energy provides for the same methods of connecting to the grid as the Renewable Energy RFP.
There are three methods of connecting to the grid, each with slightly different bid submission requirements. Bidders must elect their preferred grid connection method prior to bid submission. The methods and considerations to be taken into account for each method are highlighted below:
Under this method, the grid provider is responsible for and undertakes construction of the works to connect the facility to the transmission or distribution system.
Under this method, the project company is responsible for and undertakes construction of the works to connect the facility to the transmission or distribution system and, once completed, transfers ownership in the connection works to the relevant grid provider.
Under this method, the project company is responsible for and undertakes construction of the works to connect the facility to the transmission or distribution system and retains ownership of the connection works once completed.
If Eskom build is selected, the grid provider’s estimated timeframe for construction of the connection works may differ from the actual timeframe due to grid provider capacity constraints. Bidders also have no control over the construction process undertaken by the grid provider. If Eskom fails to complete construction of the connection works by the fixed commercial operation due date, the project company will in certain circumstances be entitled to claim relief from Eskom’s termination rights and payment for the capacity that would otherwise have been available.
In comparison to the Eskom build, the self-build and own-build options provide the project company with greater possibilities to monitor and control the costs of the connection works and the time frames within which construction of the works can be completed. But the project company will not be able to claim any relief for a late system connection if it fails to meet the fixed commercial operation due date under the power purchase agreement (excluding those parts of the works that remain the grid provider’s responsibility).
The self-build and own-build methods will be permissible only to the extent that the project substation constructed does not support any other customers. If the substation is not dedicated solely to the relevant facility then the other customers who will use the substation must agree to the bidder undertaking the self-build or own-build.
Another consideration is that complex timelines apply to the own-build method. The project company will need to obtain any applicable transmission licence or distribution licence under the Electricity Regulation Act to operate the connection to the grid over which it retains ownership. The power purchase agreement will not be signed until a transmission licence or distribution licence has been granted.