South Africa—The Renewable Energy Independent Power Producer Procurement Programme (REIPPP)
The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is a climate change flagship program that was introduced in 2011. Jointly launched by the Department of Energy, the National Energy Regulator of South Africa (NERSA), and state-owned power utility Eskom, the REIPPPP aims to encourage private investment to help further develop the renewable energy sector within South Africa.
The country has plenty of sun and wind throughout the year. This, together with the availability of large open tracts of land, provides South Africa with a huge potential to take advantage of renewable energy. The national renewable energy target is for 18,800MW to be supplied by renewable energy by 2030. In just four years, the REIPPPP alone has already delivered 5,243 MW throughout 79 different projects, which accounts for over a quarter of the target. The REIPPPP covers a variety of renewable energy technologies: onshore wind, solar PV, concentrated solar power, landfill gas, biomass, small hydro and biogas.
Figure 1: Renewable Energy power plants in South Africa
REIPPPP provides a grant-based mechanism for encouraging renewable energy production. The main evaluation criterion for the bid selection process is pricing, which carries a 70% weighting. Other factors, such as job creation, local content, and black economic empowerment, weights 30%. This encourages joint ventures with local renewable energy companies, as well as a number of foreign firms to set up local factories that cater for export. Funding is provided through a variety of foreign private equity, local private equity, and large commercial and development banks.
All winning bidders get a 20-year power purchase agreement with Eskom, backed by government guarantees that already total more than R200 billion (approximately Euro 14 billion). The government guarantees are crucial to the success of the program because they make the projects automatically bankable and fundable.
The REIPPPP is lauded by many as one of the most successful independent power producer programs in the renewables space globally. Moreover, it is designed to develop socio-economic and environmentally sustainable growth.
South Africa’s INDC Paris Agreement pledge aims at reducing GHG emissions to between 398 and 615 MtCO2e (including LULUCF), over the period 2025 to 2030. This is consistent with its pledge under the Copenhagen Accord, which proposes emissions reductions below business-as-usual levels by 34% in 2020 and 42% in 2025. Because the REIPPPP is aimed at stimulating the renewable energy sector in South Africa, it can greatly contribute towards decarbonizing the country’s economy and reaching the Paris Agreement commitments.
Guide to the Independent Power Producer process: http://www.eskom.co.za/Whatweredoing/Pages/GuideIPP.aspx
How this Public-Private partnerships works: http://www.energy.gov.za/files/WOESA/2015/northwest/Perspectives-on-the-REIPPPP-and-the-investment-and-business-opportunities-it-offers.pdf