SA Awards R9.5bn Battery Storage Contracts to Boost Energy Security

In a strategic move to bolster energy security, reduce the cost of electricity, and decrease reliance on fossil fuels, Electricity and Energy Minister Dr Kgosientsho Ramokgopa has announced the appointment of five preferred bidders under the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP) Bid Window 3. The announcement, made during a media briefing on Friday, marks a significant milestone in South Africa’s journey toward a cleaner, more resilient energy future.

The selected bidders are set to inject a R9.5 billion investment into the South African economy, highlighting strong investor confidence and momentum in the country’s energy transition strategy. The new storage capacity will play a critical role in stabilizing the national power grid, reducing load-shedding risks, and unlocking additional generation capacity from renewable sources.

Leveraging Peak Power with Smart Storage Solutions

Minister Ramokgopa emphasised that battery storage will serve as a modern solution to peak energy demand:

“What we are announcing today… is another ‘peaker’ that is going to help us during the peak, instead of relying more and more on the open-cycle gas turbines and burning diesel,” he said. “We are going to store excess energy generated during the day—especially from solar—and discharge it when we need it most. This solution aligns with global best practices and emerging technologies.”

This shift toward grid-tied battery storage systems is expected to reduce operational costs, enhance grid flexibility, and curb diesel consumption, which has heavily burdened the fiscus and increased carbon emissions in recent years.

What is BESIPPPP Bid Window 3?

Bid Window 3 (BW3) of the Battery Energy Storage Programme is a site-specific procurement initiative targeting up to 616 megawatts (MW) of battery storage. The energy and capacity services from these facilities will be procured by the National Transmission Company of South Africa (NTCSA), which will act as the buyer.

The five designated project sites are strategically located in the Free State supply area, a region chosen for its transmission network needs and opportunities for grid support. The bid process attracted substantial interest, with 33 proposals submitted by the 28 November 2024 deadline.

The BW3 round was highly competitive, reflecting both local and international interest. Notably, it resulted in a 40% decrease in average bid prices compared to Bid Window 1, and an 8% decrease compared to Bid Window 2, signaling improving economies of scale and stronger cost efficiency.

Socio-Economic Commitments and Transformation Targets

Beyond technological advancement and energy benefits, the programme is aligned with South Africa’s economic transformation agenda. The five preferred bidders have made robust commitments to inclusive development and empowerment, including:

• Black Shareholding: Minimum of 40% black ownership in IPP project companies, 30% black participation in construction contractors, and up to 42% in operations contractors.

• Job Creation: At least 852 job opportunities for South African citizens, measured in job years during construction and operation phases.

• Local Content: More than R3.7 billion will be spent on local procurement during construction and operational stages.

• B-BBEE Procurement:

  • R3 billion from B-BBEE firms

  • R1.3 billion from black-owned companies

  • R1.1 billion from QSEs and EMEs

  • R562 million from black women-owned companies

• Developmental Investment: A total of R184 million has been earmarked for:

  • Skills development for black and disabled individuals

  • Bursaries for black students

  • Supplier development initiatives

  • Enterprise and socio-economic development programmes

Integrating Renewable Energy and Flattening the Cost Curve

Minister Ramokgopa highlighted that this investment is part of a broader strategy to diversify South Africa’s energy mix by combining solar, wind, and storage technologies. These developments are already helping to flatten the cost curve of electricity, ensuring that:

• Households enjoy lower electricity costs, increasing disposable income.

• Industries can expand operations with improved power reliability.

• Economic competitiveness improves, driven by stable and affordable energy supply.

“Electricity is the backbone of the economy. If the lights are off, there is no economy,” the Minister remarked.

A Blueprint for South Africa’s Energy Transition

The rollout of BESIPPPP Bid Window 3 reinforces government’s commitment to decarbonising the power sector while ensuring energy resilience. The programme also supports South Africa’s broader climate goals, aligning with the Just Energy Transition framework and commitments under international climate accords.

As South Africa faces ongoing energy challenges, the integration of battery energy storage systems (BESS) represents a crucial evolution in utility-scale energy planning, providing the agility, efficiency, and sustainability required in the modern power sector.

The Department of Mineral Resources and Energy (DMRE) is expected to continue this momentum through future bid windows and complementary initiatives that further unlock renewable energy potential and enhance grid stability.