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Renewable Energy Power Producer Procurement, South Africa

South Africa's government appointed us as lead consultant for the design and delivery of a procurement process to introduce renewable energy projects across the country. Our role included coordinating key government stakeholders and legal, financial and technical advisors to devise the multi-billion programme.

We used our own knowledge and innovation to create a process that worked for our client.

We also acted as technical advisor, providing technical and commercial inputs for the request for proposal (RfP) and power purchase agreement (PPA) documentation, and evaluating all submitted bids for technical compliance.

The renewable energy independent power producer (REIPP) procurement programme is considered hugely successful for renewables and combines the benefits of an auction-style programme with sufficient criteria to provide assurance that the projects are viable.

Key facts

  • Technologies considered – onshore wind, solar PV and CSP, bioenergy, landfill gas, biogas, biomass combustion, and small hydro
  • We provided project management and technical advisory services in relation to promotion and development of IPPs and private sector investment into IPPs
    • Assisting with review and development of regulatory arrangements.
    • Promoting private sector participation in renewable generation.
    • Advising the regulator/private sector investors.
    • Advising on promotion and development of PPP policy framework.
    • Advising on promotion and development of IPPs.
    • Drafting/amending project documentation including RfPs, competition design and evaluation criteria, PPAs.
    • Conducting evaluation of all bids submitted and coordinating the process.
    • Incorporating lessons learned into documentation and process updates.
  • Deliverables for phase one were the RfP and six power purchase agreements
  • For round 1, our technical advisors reviewed 53 bids in five days

Challenges

  • A complex project with challenging hurdles.
  • The initial direction of the process was unclear since there was no renewables market in South Africa.
  • The project changed course frequently.

Solutions

  • The key to the success of the €500B programme was strategic management of the various government stakeholders, which included the National Treasury, the Department of Energy, the Department of Trade and Industry and Eskom.
  • We proposed a new approach, developed to work within the South African regulatory framework. It enabled the programme to quickly deploy competition and made it relatively easy to evaluate – significantly speeding up the process and allowing for project success.
  • We managed the constant change – quickly compromising and rethinking direction when something was not working. This led to good results and the client’s happiness with the ultimate deliverables.
  • Building a mutually beneficial and trusting working relationship with the client was key to the success of the programme delivery.

Value and benefits

  • We used our own knowledge and innovation to create a robust process that worked.
  • The programme work schedule was carefully planned and adhered to, allowing the team to deliver on time.
  • The assignment was intense work for a small team of consultants, for four months (the duration of the programme's design phase). It included collaboration and undivided support from us and delivered one of the quickest RfPs ever drafted, providing value for money.
  • There were no issues on budget management because the team ensured that the client was comfortable with the procurement scope.
  • Sustainability was addressed by introducing renewables to a new area in the world.
  • The team has received many accolades from the Treasury on their hard work. The South African press has also been complimentary of the programme, calling it “world-class” and “a credit to the government”.

Thank you very much for your incredible commitment, perseverance, hard work and patience dealing with all the ups and downs and living the programme with us.

PPP Unit, National Treasury

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