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The department of mineral resources & energy announced last week the list of preferred bidders to supply nearly 2,000MW of emergency power to the grid. This is in line with the 2019 Integrated Resource Plan (IRP), which identified the need for emergency procurement of 2,000MW-3,000MW to address SA’s immediate short-term electricity supply gap. What raises suspicion is the fact that gas-to-power ships account for two-thirds of the successful bids.

In the context of SA’s immediate short-term power supply gap it is appropriate to get emergency generation capacity onto the grid urgently, even if at a cost premium. However, these proposed bids are conditional on 20-year power purchase agreements (PPAs). It simply does not make sense to be locked into 20-year “emergency” contracts that would oblige SA to continue paying emergency-solution prices long after the supply gap has been closed...

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