REIPPP round 4 projects

South Africa’s energy minister Jeff Radebe on 1 June announced that the fifth round of the country’s renewable energy independent power producer procurement programme (REIPPP) will be launched in November. He was speaking at an Energy Sector Stakeholder Engagement meeting in Midrand, Gauteng. The round will procure 1,800MW of renewable energy, in a highly significant demonstration of commitment to the programme by the government.

Radebe said; “A new bid round i.e. [bid window] 5 of the renewable energy IPP programme will be launched in this year and it is estimated to be 1,800MW of similar technologies as in the expedited bid window”.

The REIPPP expedited round was intended to allow developers one more chance to bid projects which had been developed into the programme before rules were changed for the fifth round. Although bids were submitted and preferred bidders selected, but not announced, the bids have now expired, suggesting it will now be replaced by round 5.

There was a lot of discussion about changes to the process to reduce the high cost of bidding and improve the rules about local content and ownership in the year following the round 4 announcements. Local content rules in particular have been criticised for being convoluted and ineffective. Opponents of the programme have frequently attempted to question whether it has delivered benefits for local communities.

In an indication that there will be attempts to address this in the next round, Radebe said that “there will be specific reference and requirements for women-owned business participation and special opportunities for the youth”.

The fourth round of the REIPPP suffered long delays. Preferred bidders were announced in April and June 2015 but key agreements were not signed until April this year. In the interim, vocal groups opposing the programme have become more prominent, initially led by senior executives at Eskom and the coal lobby but now joined by elements of the trade union movement and radical political parties.

These groups claim that the programme is part of a backdoor privatisation of Eskom, replacing generation from Eskom coal plants with non-Eskom renewables to create a financial crisis at the utility and justify its disintegration and sale. Plans for restructuring the utility are likely later in the year. Although widely rejected by independent energy analysts, the view has become increasingly entrenched. Recent weeks have seen job creation figures for the REIPPP challenged and attempted court injunctions against the programme.

This makes the announcement of a further round particularly significant, as the government commits to procurement through the programme without waiting for the results of the updated Integrated Resource Plan – the national generation plan – and ahead of the procurement of other technologies.

“It is important to note that the imported LNG as well as natural gas-to-power programmes are still a very high priority”, Radebe said. He added that, “coal is still part of the energy mix and we have procured two projects of 864MW [Khanyisa and Thabametsi] of coal-fired power plants. It will bring another R40bn of investment to the country and at least 5,000 jobs during construction”.

University of Cape Town professor Anton Eberhard, who is an advisor to Cyril Ramaphosa, tweeted soon after the announcement; “This is a big deal … We’ll see prices come down even more”.