An Update On The Renewable Energy Independent Power Producer Procurement Programme

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The Government’s Integrated Resource Plan (IRP), published in May 2011, sets out South Africa’s required new generation capacity for the next 20 years.  As this plan followed a time of serious energy shortages, it is encouraging to see government’s clear intention to diversify the energy mix and move away from fossil fuels, break its monopoly by handing over some of the responsibility of providing energy and by moving towards renewable energy; synchronising with Environmental Agency targets to reduce greenhouse gas emissions by 34% by 2020.


In accordance with the IRP, the Request for Proposal (RFP) was published in August 2011. This provides for the procurement of renewable energy up to 2016 in terms of the REIPPP programme, which is a bidding system for the private sector, with the preferred bidders entering into a 20 year Power Purchase agreement (PPA) with Eskom, as well as an Implementation Agreement with the Department of Energy (DOE). The private sector alternative energy is essential to energy stability while also presenting an opportunity to take advantage for the possibilities relating to the Green Economy and boost employment.

The REIPPP programme was set to procure 3 725 MW of renewable energy capacity and is expected to attract investments of around R100-billion between 2012 and 2016.In some of the technologies included in the bidding programme, the target  for foreign investment is as high as 60% with a minimum 40% South African Equity Participation which is intended to attract developers to South Africa in order to expand employment opportunities and broaden skills.

An estimated amount of US$ 10 million was spent on fine tuning the tender design and bid evaluation process.  A large legal, technical and financial advisory team was assembled (local & international).  There is a general consensus that the quality of the documentation is excellent and that there is a secure and transparent evaluation process.


The IPP programme is being conducted in five phases or tender rounds termed Windows, Bids or Rounds.

Procurement caps and price caps were set for individual technologies as well as price caps for each technology. Financial Close was sent for 6 months after announcement of preferred bidder status. The preferred bidders enter into standard 20 year, locally denominated, Power Purchase Agreement (PPA) with Eskom and Implementation Agreements with the Department of Energy, where the IPP is obliged to deliver on economic development promises. This contract also makes the DOE liable to the IPP for any default on the part of the buyer (Eskom).







1850 MW


200 MW


1450 MW


12.5 MW


12.5 MW


25 MW


75 MW


100 MW



Evaluation and Criteria

Pricing is the main evaluation criteria with a 70% evaluation weighting.Prices were capped for each technology.  Initially, Wind projects would need to be priced at below 115c/kWh, solar PV and CSP at below 285c/kWh, while a cap of 107c/kWh had been set for biomass, 80c/kWh for biogas, 60c/kWh for landfill gas and 103c/kWh for mini hydro. The Bids were evaluated by a team of professional financial, technical and legal advisers and approved by the DoE’s adjudication committee. The non-price criteria, which carried a 30% evaluation weighting, included issues such as localisation, black economic empowerment, preferential procurement, community development and job creation. The bids needed to be financially sound in structure, technically viable and have received all the necessary environmental approvals.

Prospective bidders were also expected to pay a non -refundable fee of ZAR 15,000.00 to be able to access the request for proposal documentation and a bid bond of ZAR 100,000.00 for every megawatt of capacity bid. (100 MW project= 10 million ZAR bid bond)


Window/ Bids: Round 1 


Bid date 4 November 2011

Preferred Bidders Announced 7 December 2011

Financial Close 19 June 2012

Agreements entered into 5 November 2013


  • Bid Tender capacity to be awarded 3625 MW 
  • 53 bids received with a capacity of 2128 MW 
  • 28 qualified and awarded preferred bidder status with a potential capacity of 1415.52 MW 
  • 25 noncompliant bids
  • 18 Solar Photovoltaic (PV) Projects
  • 8 Onshore Wind Projects
  • 2 Concentrated Solar Power (CSP) Projects


•  Prices marginally below tender caps 

•  Financial close and contract signing within 15 months of RFP 

•  Estimated total investment of US$ 6 billion 

•  funding mostly by local banks 

•  Real returns close to 17% 

•  All have commenced construction 

•  First project Kalkbult connects to grid on 12 November 2013 



The 18 solar PV projects that made it through to the preferred-bidder stage had a combined capacity of 631.53 MW and were named as:

SlimSun Swartland solar park (5 MW)

RustMo1 solar farm (6.76 MW)

Mulilo Renewable Energy Solar PV De Aar (9.65 MW)

Konkoonsies Solar (9.65 MW)

Aries Solar (9.65 MW)

Greefspan PV power plant (10 MW)

Herbert PV power plant (19.9 MW)

Mulilo Renewable Energy solar PV Prieska (19.93 MW)

Soutpan solar park (28 MW)

Witkop solar park (30 MW)

Touwsrivier project (36 MW)

De Aar Solar PV (48.25 MW),

South Africa Mainstream Renewable Power Droogfontein project (48.25 MW)

Letsatsi Power Company (64 MW)

Lesedi Power Company (64 MW)

Kalkbult project (72.5 MW)

Kathu solar energy facility (75 MW)

Solar Capital De Aar (75 MW).


The two solar CSP projects were named as:

Khi Solar One (50 MW) 

Ka Xu Solar One (100 MW)


The 8 wind projects listed, which collectively represented 633.99 MW of capacity, included: 

Dassiesklip wind energy facility (26.19 MW)

MetroWind Van Stadens wind farm (26.19 MW)

Hopefield wind farm (65.40 MW)

Noblesfontein (72.75 MW)

Red Cap Kouga wind farm - Oyster Bay (77.6 MW)

Dorper wind farm (97 MW)

Jeffreys Bay project (133.86 MW) 

Cookhouse wind farm (135 MW)


The projects recommended for selection were located across all nine provinces, excluding KwaZulu-Natal and Mpumalanga. All projects would need to be generating power by mid-2014, apart from the CSP plants, which had been given a deadline of 2016. 






Window/Round 2 


Bid date 5 March 2012

Preferred Bidders Announced 21 May 2012

Financial Close 13 December 2012

Agreements entered into on 9 May 2013


• Bid Tender Capacity to be awarded 1275 MW

• 79 bids received with a capacity of 3255 MW

• 51 qualified

• 9 noncompliant bids

• 19 awarded preferred bidder status with a capacity of 1045 MW

• Prices drop

• Local content increases

• All have reached financial close

• Estimated total investment US$ 3.5 billion



 The 9 Solar PV projects that were selected as preferred bidders with a combined allocation of 417.1 MW against an allocation of 450 MW and were named as:

Solar Capital De Aar 3 (75 MW)

Sishen Solar facility (74 MW)

Aurora project (9 MW)

Vredendal project (8.8 MW)

 Linde project (36.8 MW)

Dreunberg venture (69.6 MW)

Jasper Power Company development ()

Boshoff Solar Park (60 MW)

Upington Solar PV plant (8.9 MW)


The 7 wind projects selected, representing 562.6 MW:

Gouda wind facility (135.2 MW), the 137.9 MW 

Amakhala Emoyeni (Phase 1) (137.9 MW)

Tsitsikamma Community wind farm (94.8 MW)

West Coast 1 project (90.8 MW)

Waainek venture (23.4 MW)

Grassridge project (59.8 MW)

Chaba project (20.6 MW)


The two small hydropower preferred bidders were named as the 4.3 MW Stortemelk hydro scheme and the 10 MW Neusberg hydroelectric project.

The 50 MW CSP project was named as the Bokpoort CSP project.


The average prices offered by the solar PV developers fell from 275 c/kWh in window one to 165c/kWh, while wind fell from 114c/kWh to an impressive 89c/kWh. The CSP prices fell slightly from 268c/kWh to 251c/kWh.

The second-window preferred bidders also offered superior local content terms, with solar PV rising to 47.5% from 28.5%, wind rising from 21.7% to 36.7% and the CSP projects rising from 21% to 36.5%.



Window/Round 3


Bid date 19 August 2013

Preferred Bidders Announced 29 October 2013 & 31 December 2013

Financial Close 30 July 2014


•Bid Tender capacity to be awarded1473.1 MW

• NEW additional allocation of 200 MW for Concentrated Solar Power

• 93 bids received with a capacity of 6023 MW

• 58 qualified

• 17 awarded preferred bidder status with a capacity of 1471.5 MW

• 2 stage preferred bidder allocation

• No small hydro despite a tender capacity of 121 MW

• Bidders need to make Economic Development commitments regarding the actual number of jobs created over the life of the project and account for every job that they commit to.

• Stringent BEE weighting – encouraging bidders to work with new BEE investors, particularly those who are broad based and most importantly have a significant amount of local community ownership. 

• pricing drops further = +/- 40% drop from Round 1

• Foreign Investment 25% debt, 50% equity

•  Estimates total investment US$ 4.5 billion


  • Onshore Wind - 7 Preferred Bidders totalling 787 MW
  • Solar Photovoltaic - 6 Preferred Bidders totalling 435 MW
  • Biomass - 1 Preferred Bidder of 16 MW
  • Landfill Gas - 1 Preferred Bidder of 18 MW
  • Concentrated Solar - 2 Preferred Bidders totalling 200 MW

The 6 Solar PV projects that were selected as preferred bidders with a combined allocation of 435 MW against an available allocation of 401 MW and were named as:

Adams Solar PV 2 (75 MW)

Tom Burke Solar Park (60 MW)

Mulilo Sonnedix Prieska PV (75 MW)

Electra Capital (75 MW)

Pulida Solar Park (75 MW)

Mulilo Prieska PV (75 MW)



The 7 wind projects selected, representing 787 MW against an available allocation of 654 MW:

Red Cap – Gibson Bay (110 MW) 

Longyuan Mulilo De Aar 2 North Wind Energy Facility (139 MW)

Nojoli Wind Farm (87 MW)

Longyuan Mulilo De Aar Maanhaarberg Wind Energy Facility (96 MW)

Khobab Wind Farm (138 MW)

Noupoort Mainstream Wind (79 MW)

Loeriesfontein 2 Wind Farm (138 MW)


Concentrated Solar Power (CSP)

Xina CSP South Africa (100 MW)

Karoshoek Consortium (100 MW)


Landfill Gas

Johannesburg Landfill Gas to Electricity (18 MW)


Mkuze (16 MW)


The average prices offered by the solar PV developers plummet from 165c/kWh in window 2 to 82c/kWh, while wind made a more modest decline in price from 89c/kWh to 73c/kWh. The CSP prices for Window 3 are not comparable with windows 1 & 2 as the pricing formula changed.  Round 3 price 163c/kWh (Round 2 was 251c/kWh).

The third-window preferred bidders also offered superior local content terms, with solar PV rising from 47.5% to 53.8%, wind rising from 36.7% to 46.7% and the CSP projects rising from 36.5% to 44.3%.


Round 3 promises to deliver 8000 jobs during construction phase and 18 000 during the operations period (1 job = 12 person- months).

 Due to the large number of very competitive Bid Responses submitted for the Third Bid Submission Date in the Onshore Wind and Solar Photovoltaic Technologies, and the Department is considering the appointment of additional Preferred Bidders for those Technologies from the remaining Compliant Bidders.  The Department will make a further announcement regarding its decision in this regard in due course, and is intending to do so by not later than 31 December 2013.  The future of renewable energy is bright.





MW allocated Round 1

MW allocated Round 2

MW allocated Round 3


















































The information in this Chapter is based on information requested from the Department of Energy, as well as the authors own experience.



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Kalkbult – the first solar power plant goes live.

Tuesday 12 November was a momentous day for South Africa.  Kalkbult the first solar power plant under the IPP programme, connected to the grid.  So now for the first time, even though it is only a very small portion, our energy usage is powered by the sun.  This 75 MW PV power station is halfway between De Aar and Hopetown  and will generate 155 million kilowatt hours a year – enough to power the annual consumption of 30 000 plus households. The project was three months ahead of schedule, built by Scatec -a Norwegian company, it consists of 312 000 solar panels and covers 105 hectares of land.  It is built on land leased from a sheep farmer who will continue to farm on the land surrounding it, and 600 employees from the local community where involved in the construction and many of those will continue to manage the facility for its 20 year planned lifespan. 

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