Name and Location
Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) – third round, South Africa.

Client
Department of Energy (DoE).

Project Description
Seventeen renewable-energy developers have been appointed as preferred bidders, following the conclusion of the third bid-submission round under the REIPPPP.

The DoE received 93 bid applications and the projects represented by the 17 preferred bidders have a collective installed capacity of 1 471.5 MW, comprising seven onshore wind bidders (787 MW), six solar photovoltaic (PV) bidders (450 MW), one 16.5 MW biomass bidder, one 18 MW landfill gas bidder and two concentrated solar power (CSP) bidders (200 MW).

Value
Not stated.

Duration
The winning bidders are expected to sign project agreements with the DoE by July 30, 2014, after which developers will have about one month to finalise all documentation and foreign-currency hedging before project roll-out is set to begin.

Latest Developments
Futuregrowth Asset Management is investing R165-million in five projects in round three of the DoE's REIPPPP.

This brings the total number of REIPPPP projects in which Futuregrowth is involved, through its Power Debt Fund (projects in round one and two) and its Development Equity Fund (round three projects) to 23.

The five third-widow projects in which Futuregrowth is involved includes a 111 MW wind farm at Gibson Bay, in the Kouga municipality, in the Eastern Cape, which has been awarded to Italian Enel Green Power. Futuregrowth is a development equity partner in the 37-turbine Gibson Bay wind farm. The project is scheduled to enter commercial operation in early 2017, generating more than 424 GWh/y at a fully indexed price of 66.4c/kWh, the lowest tariff bid in round three.

In addition to this, Futuregrowth is an equity partner in a consortium led by global wind and solar company Mainstream Renewable Power, which has been awarded preferred-bidder status for three large-scale wind energy projects in the Northern Cape, with a combined generation capacity of 360 MW. The Mainstream projects, representing a total investment of about R9-billion, are the Khobab wind farm and Loeriesfontein 2 wind farm, both with 140 MW capacity, in Namakwa, and the 80 MW Noupoort wind farm, in Umsobomvu.

The fifth project is a R2.05-billion 86 megawatt-peak ground-mounted solar power plant, which is expected to generate about 210 GWh/y. The project has been secured under a codevelopment agreement between Total SA and Mulilo Renewable Energy.

Each of the five projects have secured a 20-year offtake purchase agreement with State-owned power utility Eskom.

Futuregrowth, on behalf of its clients, has provided debt financing of more than R4-billion for 18 energy projects during rounds one and two – in wind, solar PV and concentrated solar thermal – and expected to provide more funding in the secondary market.

Futuregrowth renewable-energy specialist Margo Buchanan says the company may pick up more projects later this year and says its success is owing, in part, to having been involved in the REIPPPP process from its inception.
Meanwhile, the DoE has postponed an announcement regarding the appointment of further renewable-energy projects in addition to the 17 perferred bidders, following the third bid window under the REIPPPP.

Initially, an announcement regarding the possible addition of further preferred bidders was scheduled for November 20, but the DoE has experienced delays in finalising its approach to the allocation of additional capacity for onshore wind and solar PV technologies. The DoE aims to make an announcement by no later than December 31, 2013.

With the addition of the 17 projects on October 29, South Africa’s portfolio of approved REIPPPP projects has increased to 64, representing a combined investment value of between R120-billion and R150-billion and a collective capacity of 3 933 MW.

There are currently 47 projects that have already moved through the financial-close threshold and which are at various stages of development. Some projects have even started producing electricity.

However, the 93 bids with competitive responses, received by the August 19 submission date, representing 6 032 MW of potential capacity, prompted the DoE to consider the appointment of additional preferred bidders.

This would require a reallocation of the capacity set aside for onshore wind and solar PV projects for future REIPPPP submission windows, as the allocation for round three had been restricted to 1 473 MW.

Several commentators have argued strongly in favour of adding to the third-round allocation, and Energy Minister Dikobe Ben Martins has indicated that the issue is being given serious consideration.

Meanwhile, it has also emerged that the State-owned Industrial Development Corporation (IDC) has approved R6.5-billion in support for five of the projects that qualified as preferred bidders in round three.

Green industries head Rentia van Tonder reports that the development financer is a shareholder in and lender to the third round’s two CSP projects, Xina and Karoshoek, each with a capacity of 100 MW. It is also supporting two wind projects and one solar PV project.

Bidders are concluding finance arrangements with lenders and construction agreements with contractors to reach financial close in July 2014, the date set by the DoE for signing the power purchase agreements for these projects.

Key Contracts and Suppliers
Mainstream Renewable Power, Abengoa, Cobra Energia.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Mainstream Renewable Power, Emmet Curley, tel +353 1 290 2027 or email emmet.curley@mainstreamrp.com.
Abengoa communications department, Patricia Malo de Molina Meléndez, tel +34 954 93 71 11 or email communication@abengoa.com.
Cobra Energia, tel +91 456 95 00, fax +91 456 94 50 or email central@grupocobra.com.