As round one of the Renewable Energy Independent Power Producer Programme (REIPPP) nears financial close, the Windaba 2012 conference, in Cape Town has been used as a platform to discuss experiences of the REIPPP to date and give constructive suggestions about the process as the renewable-energy industry moves forward.
Speaking at the conference Mark Pickering, adviser to Globeleq SA, which is involved in the development of four first-round REIPPP projects, said a number of potential areas of improvement in the process were now apparent. Firstly, simplification of the bid documentation should be undertaken, which could include combining the economic development matrix, economic development scorecard and quarterly obligations into a single document.
Aligning the definitions used in the request for proposal with the implementation agreement was also a key improvement that was needed, as well as the clarification and removal of extraneous information in the implementation agreement.
“It took us teams of legal advisers to get our heads around these things and finally understand that the implementation agreement trumps everything else and that’s what counts. But even in the implementation agreement there are definitions that are just too loose.”
Offering open dialogue sessions between preferred bidders and the Department of Energy’s Independent Power Producer (IPP) unit could also assist in resolving issues, rather than relying on written communication which amounted to “hundreds” of letters in the first bid rounds, said Pickering. “Dialogue is a much more effective way of cutting through misunderstandings. When we have had those meetings they’ve really helped a lot.”
“Obviously a new development is the draft amendments to the [broad-based black economic-empowerment] codes – that needs to be incorporated into all of these and made clear for round one and round two bidders who will have to adapt to the new codes,” he said.
Along with a closer look at how the socioeconomic development obligations were structured and how economic development efforts should be reported on, another practical issue that needed to be clarified in the process was the job creation obligations, as the definition provided was too vague.
“Where do you stop counting jobs? Every party we meet has a different view on the boundary – is it at the edge of the site, is it at the edge of the primary contractors, do you go down to subcontractors? The comment that the job numbers look low is probably accurate because the way the jobs are being counted is probably conservative. In fact, a lot more jobs are being created, they are just not being recognised.”
In Pickering’s view, the success of the REIPPP had been as a result of the broad political consensus that renewable energy would be the centrepiece of a green economy. Thus, going forward, the sustainability of the programme would rely on continuing political consensus and so projects must, therefore, deliver tangible social and economic benefits in order to sustain that political support.
“Let’s keep working together to get the balance right. Let’s have as much engagement between all parts of industry and government as possible,” he concluded.