BPC exporting power for the first time ever
Over 166 companies have applied or expressed interest for the multibillion Pula joint ventures with Botswana Power Corporation (BPC) for both a 100 MW industrial scale solar plant and the setting up of hybrid networks in 20 rural areas.
The process to start awarding the tender will start in a month’s time. BPC issued documents reference 2157/17 calling for Expression of Interest (EOI) for joint ventures on 22nd May 2017 with the closing date set for 14th June 2017. BG News has it in good authority that over 160 companies, among them European, South African and Chinese entities have accordingly responded and are waiting to be shortlisted and be invited to submit bids at the Request for Proposal (RfP) stage.
In a bid to address the power supply challenges and to meet the future electricity demand, the Botswana Power Corporation (BPC) in conjunction with the Ministry Of Minerals, Green Technology and Energy Security (MMGE) have embarked on a comprehensive electrical power system development strategy which includes among others, the development of a 100MW solar power plant two years from appointment of the preferred Independent Power Producer (IPP) joint venture partner.
The additional power generated will be from a new solar power plant constructed, commissioned, owned and operated, by the IPP joint venture company. This initiative is in line with National Energy Policy goal of providing affordable, reliable and adequate supply of energy for sustainable development, as well as improving access to and efficient use of energy resources.
BPC would therefore like to engage companies or firms into a Joint Venture for the development, implementation and operation of a 100 MW Solar Power Plant with suitable storage capacity. The plant will be located in Botswana, and the newly formed Joint Venture will sell its power to BPC through a Power Purchasing Agreement (PPA). Therefore, Expression of Interest is invited from power generation companies /Independent Power Producers (IPPs) /power plant developers / Captive Power Producers for developing a solar power plant in a joint venture with BPC.
Chief Executive Officer of BPC, Dr Stefan Peter Schwartzfischer and Edward Rugoyi- the officer in charge of the process confirmed that both EOIs have received a good response, an indication that Botswana is an attractive destination for energy investors. Speaking to BG News Schwartzfischer confirmed that offers will be made in the next four weeks.
He said the next stage will be to go to the selective tender process which will lead to the-short-listing of six companies. The six companies shortlisted will be asked to provide and or show that they have the knowledge of implementing, installation and maintenance of such project .That will be followed by the negotiations stage which will happen around October 2017.
Swartzfischer said there is an ongoing advert concerning the setting up of the hybrid of the electrification. This hybrid is not connected to the national grid and the invitation closes on 25th July, 2017.
He revealed that the construction of Morupule A will start at the end of the month, while Morupule B is currently operating with all its four units. “For the first time BPC is exporting power to the sub region- of the Southern African Power Pool.”
Does BPC have the capacity to evaluate the Bids?
In recent past questions have been asked about BPC’s capacity to evaluate the bids submitted. BG News has been reliably informed that early this year a delegation from the Development Bank of Southern Africa visited and attended a conference organised by the Ministry Of Minerals, Green Technology and Energy Security (MMGE), where they allegedly offered to assist to fund and build capacity to allow BPC and MMGE to effectively run the procurement of energy from independent power producers (IPPs).
This new unit will have the capacity similar to the Renewable Energy Independent Power Programme run by an IPP office under the Department of Energy in South Africa. This programme has been internationally applauded for its transparency and efficiency and has given international investors the confidence to invest in the numerous projects that have been developed to date.
BG News made several attempts to solicit a comment from the Department of Energy Affairs, to confirm their meeting with DBSA, but so far the request for a meeting and, or response has hit a snag.
The Marubeni issue
Recently a Japanese Independent Power Producer (IPP), Marubeni Corporation who was awarded tender to build the multimillion Pula Morupule B Unit 5 and 6 power plants which will produce an additional 300MW into the national grid shelved production raising concerns that BPC will not be able to purchase power from them as it is not bankable and wanted government to provide support guarantee.
However, the refusal by government to provide support guarantee on the Morupule B plant does not seem to have deterred investors. In resolving the issue of government guarantees to Independent Power Producers, according to the expression of interest, government recommends Public Private Partnerships.
This means that since BPC will be a shareholder in the project, it becomes easier for the government to issue a guarantee as it would in effect be issuing the guarantee to a company it either controls or in which it owns a significant minority.
Government turns to Public Private Partnerships In line with the significant decline in the government’s capacity to finance mega-projects, government has turned to public private partnerships. A Public-private partnership (PPP) is described as a legally constituted relationship between the state or its agencies with private sector firm(s) in which the private sector firms substitute the state in the provision of public goods and services over a specified or indefinite period, for mutual benefit.
The private sector would assist with the financing of the projects and the state would sign or guarantee the offtake contracts to make the project financeable by banks and investors. However, financial experts say the principal concern in Botswana going this route is that currently there is no PPP legislation.
Case for Solar Energy
Solar power is booming in popularity all around the world, across all sectors, from household to utility scale, and both on and off the grid. Historically solar energy has been prohibitively expensive to produce on an industrial scale. However, for the past 10 years, prices of the major component in solar plants, being the solar panels, have consistently fallen, some experts say by as much as 80%. This has resulted in this energy source becoming more affordable.
The current problem with solar energy is that at night there is limited or no energy produced. The solution has been to build CSP plants to store the solar energy for use at night. However, these technologies have proven to be prohibitively expensive.