Boutique advisory company EDPlatform, established in 2012 to support energy developers meet the economic-development requirements of South Africa’s independent power producer (IPP) procurement initiatives, has described recent announcements on the expansion and acceleration of the country’s IPP programmes as “game changing”.

Energy Minister Tina Joemat-Pettersson announced in mid-April that, with more than 5 000 MW of renewable-energy capacity already procured, she would be adding a further 6 300 MW to the overall renewables allocation, opening the way for yet more bidding rounds.

EDPlatform cofounder and CEO Steven Hawes told Engineering News Online that the announcement would increase the attractiveness of South Africa as an IPP investment destination, and would add momentum to the already highly regarded Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

Following four competitive-bidding rounds, 79 projects had been procured under the REIPPPP, with the latest 13 preferred projects also named in mid-April.

Once all the facilities enter commercial operation, South Africa’s renewables capacity would rise to over 5 200 MW, with the first four bid windows having attracted private investment of R168-billion.

In addition, Joemat-Pettersson indicated that, owing to the competitive nature of the 77 bids received during the fourth bid window, she could name additional preferred bidders over and above the 13 already selected.

A ‘Request for Further Proposals’ would also be released by early June for a further 1 800 MW to be procured under an accelerated programme, with bidding open to unsuccessful bidders from all previous bid windows.

However, Hawes is equally excited by the Minister’s confirmation that the first bid window for an allocation of up to 2 500 MW of coal baseload capacity would commence during the course of 2015 and that processes were being put in place for the procurement of more than 3 100 MW of gas-to-power capacity and at least 800 MW of cogeneration capacity.

Should all the programmes perform as advertised, South Africa could have an IPP sector delivering as much as 19 000 MW of capacity by the early 2020s – a meaningful expansion of private generation capacity in a country hitherto dominated by a single coal-heavy utility.

The announcement, Hawes added, had materially extended the investment horizon for IPP developers and had provided much needed visibility for the future IPP pipeline.

For EDPlatform, the announcement also offered scope for continued growth, particularly in light of the emphasis being given by the Department of Energy (DoE) to economic development components such as job creation, local content, skills development, community ownership and upliftment, localisation and black economic empowerment.

“With prices having fallen dramatically, developers are increasingly looking to the economic development aspects of their bids to differentiate themselves from their competitors,” director Jon Mulcahy explains.

This trend, Mulcahy added, was likely to be replicated in the coal and gas programmes.

Hawes also expected economic development to become a feature of bidding processes in other parts of Africa and even on other continents as the global energy industry began using the South African experience as a “case study”.

“We expect to expand beyond the 13 employees we have currently in Johannesburg and Cape Town as the pressure mounts on IPPs to report back to the DoE on the implementation of their economic development commitments,” Hawes explained.

He said that, over the 20-year life of renewable-energy projects, billions of rands would flow back into the mostly rural communities that were now hosts of some of the largest renewable-energy projects globally.