In the recent bidder’s conference for the Seventh Phase submission of proposals under South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), noteworthy progress was outlined by the country’s Independent Power Producer Procurement Office.

Legal and policy context

The Minister of Mineral Resources and Energy published the Integrated Resource Plan on October 18, 2019, serving as a policy planning tool for future electricity supply. To give effect to this plan, various Determinations were issued, designating the Department of Mineral Resources and Energy as the Procurer and Eskom as the Buyer. The Seventh Bid Submission Phase of the REIPPPP aims to procure up to 5000 megawatts, including 1800 MW of Solar Photovoltaic and 3200 MW of Wind.

Project structure and legal functionality requirements

Each project must have a minimum 49% South African entity participation. Furthermore, the importance of complying with legal functionality criteria was emphasized, covering project structure, legal criteria, land acquisition and land use criteria, environmental consent criteria, technical criteria, financial criteria, and value for money.

Financial criteria and robust financial model

Bidders are required to meet three key financial criteria: price, financial standing and robustness of the funding proposal, and the robustness of the financial model. The proposed price per megawatt-hour (MWh) must be based on full Consumer Price Index (CPI) indexation. Additionally, financial provision for the decommissioning of the facility was highlighted. Specific requirements for equity finance and the necessity of a robust financial model, supported by an independent audit, were underscored.

Commercial close and participant reserves

Successful bidders will be requested to negotiate agreements with members, contractors, lenders, and suppliers. The commercial close will involve the finalization of key agreements, including the implementation agreement, power purchase agreement, independent engineer agreement, direct agreement (where applicable), and connection agreements. It was also noted that the Department reserves the discretion to appoint reserve bidders after the appointment of preferred bidders, allowing for potential future allocations of megawatts.

This seventh phase of the REIPPPP marks a significant step towards expanding South Africa’s renewable energy capacity, encouraging the participation of bidders who meet rigorous legal, financial, and technical criteria.

You can access the full recording at the following link.

If you would like more information about this tender or others, please contact the SALT team at salt@ceg.es