Minister of Energy clarifies the future of Renewables and IPPs in South Africa

Norton Rose Fulbright endorses the statement made by Minister of Energy Joemat-Pettersson on the 29 July 2016 committing the government to continue with the renewables programme in South Africa. We are market leaders in the South African government’s Renewable Energy Independent Power Producer Procurement Programme (SA REIPPPP). Over the four Bid submission rounds and the expedited round of the SA REIPPPP, of the 92 projects selected as preferred bidders to date, we have advised on more than half of the projects on a mix of developer, lender and contractor mandates. We applaud the Minister for clarifying the government’s position, approach and commitment to the SA REIPPPP alongside confirming the government imperative to diversify South Africa’s energy mix.

The Minister’s statement comes after an Eskom chairperson indicated that the utility may be unwilling to sign further PPAs beyond the preferred projects selected under bid widow 4.5 of the SA REIPPPP.

Welcome quotes from the Minister include the following:

“Renewable energy has a key and lasting role to play in SA’s future. Our renewable energy sector has been built up in the past four years and has contributed significantly to the growth of our economy. We expect this sector to continue to grow in the years ahead. “

“The imperative to diversify our energy mix to one that includes new generation capacity including independent power producers (IPPs), is based on our commitment to meet the needs of current and future electricity customers. Our Renewable Energy Independent Power Producer Procurement Programme has become one of the world’s most progressive and successful alternative energy programmes.” “We have started down an irreversible path with the success of our IPP and renewable energy programme, and firmly believe that together with all our partners in the government we can continue to work to create a better life for all through the provision of sustainable energy.”

The commissioned IPP projects have collectively achieved the following

• over 2,000MW of green energy, mostly in remote areas of the country
• R200bn in investment, R54bn from foreign investors
• 25,000 sustainable jobs
• The lives and livelihoods of people have been changed through socioeconomic development spending of R171m so far, on education, health and social services, while the R53m provided for enterprise development initiatives is stimulating local black-owned enterprises to grow their businesses and employ more people

The Minister also noted that the Department will shortly be making announcements regarding the adjudication of the coal-based IPP programme, as well as the expedited renewable energy IPP programme bid window.

Read the Minister of Energy's analysis