Specialist black-owned fund manager Mergence Investment Managers and the State-owned Industrial Development Corporation (IDC) will support ten small and medium-sized enterprise (SME) bidders with the R600-million in debt funding allocated to the first phase of the Small Projects Independent Power Producer Procurement Programme (SPIPPPP).

Mergence and the IDC have each committed to 50% of the R600-million value of projects that bid.

The SPIPPPP forms part of government’s aim to procure 10 000 MW of power from renewable energy; 200 MW will be secured from small projects in the SPIPPPP, each with a maximum contracted capacity of 5 MW, allocated over four bid submission phases, or windows.

Bidding in the first phase includes 50 MW allocated across renewable, photovoltaic, wind and biomass technologies.

Mergence portfolio manager Mark van Wyk tells Engineering News that renewable-energy projects are capital-intensive investments that require specialist investor focus and expertise.

“Mergence has identified that investment in the SPIPPPP can generate long-term, above-average, risk-adjusted rates of returns for our institutional investors. Given Mergence’ expertise in renewable energy, it is well positioned to execute on these investment opportunities,” he says.

Van Wyk expects that SME involvement in renewable-energy generation will increase and facilitate growth in the local industry.

IDC head of green industries Lizeka Matshekga says the programme provides great scope for localisation and adds that the partnership with Mergence will also ensure broad-based black participation in the generation of alternative energy.

Mergence is hopeful that the SPIPPPP will continue to receive funding, as it expects competitive tariffs across different technologies, together with increased local ownership and local procurement, giving effect to the infrastructure spending ripple-effect expectations.

Van Wyk says that, given the acute energy shortage of the national grid, it is evident that the contribution of renewable-energy generation from wind and solar projects has significantly assisted in keeping rolling blackouts at bay.

He states that, although it is generally accepted that the intermittent supply of renewable-energy-generated capacity is not as reliable as baseload energy, in recent presentations by State-owned power utility Eskom’s national control centre, it was illustrated that the national grid is exposed to more shortages during the summer months, owing to Eskom’s maintenance scheduling taking place during summer.