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          GreenCape is a non-profit organisation that works at the interface of business, government
             and academia to identify and remove barriers to economically viable green economy
        infrastructure solutions. Working in developing countries, GreenCape catalyses the replication
          and large-scale uptake of these solutions to enable each country and its citizens to prosper.

                     We thank Mandisa Mkhize and Jack Radmore for the time and effort
                      that they have put into compiling this market intelligence report.

                 While every attempt has been made to ensure that the information published
                 in this report is accurate, no responsibility is accepted for any loss or damage
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                                         Copyright © GreenCape 2021

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       This market intelligence report was produced in partnership with the Western Cape Government
                             Department of Economic Development and Tourism.

                  2nd Floor, North Wharf, 42 Hans Strijdom Ave, Foreshore, Cape Town, 8001

             Authors:                                     Mandisa Mkhize and Jack Radmore
 Editorial and review:                                    Cilnette Pienaar, Lauren Basson,
		                                                        Bruce Raw and Nicholas Fordyce
              Images:                                     GreenCape, Mainstream Renewable Power,
		                                                        Nicholas Fordyce and Kervin Prayag
  Layout and design:                                      Tamlin Lockhart
                                                                                                                              Policy, legislation, and governance 35
                                                                                                                              3.1. Guiding policies 37
                                                                                                                              3.2. Government departments involved
                                                                                                                                   in the energy and electricity sector 38

                                                                       Introduction and purpose 7

                                               0                                                2
                                                                       1                                                   3

                                                 Executive summary 1                            Sector overview 11
                                                 What’s new? 5                                  2.1. South African electricity landscape 13
                                                                                                2.2. The development of utility-scale renewable energy in South Africa 13
                                                                                                2.3. The Renewable Energy Independent Power Producer Procurement Programme 18
                                                                                                2.4. South Africa utility-scale renewable energy market size 23
                                                                                                     2.4.1. The current South Africa utility-scale renewable energy market size 23

                                                                                                     2.4.2. The economic value of renewable energy facilities 24
                                                                                                     2.4.3. Investments made to date 24
                                                                                                     2.4.4. The integrated resource plan 26
                                                                                                     2.4.5. The potential of utility-scale renewable energy – beyond the IRP 32
                                                                                                2.5. South Africa Renewable value chain 33
                                                                                                2.6. Key players in the South Africa renewable energy market 34
Funding and incentives 57
                                  5.1. General database web page 59
                                       5.1.1. Green Finance Database 59
                                       5.1.2. Government funding and incentives database 59
                                       5.1.3. Finfind database 60
                                       5.1.4. AlliedCrowds database 60

                                                                                                     GreenCape’s support to
                                                                                                     businesses and investors 65

4                                                              6                                                                   8
                                5                                                             7
                                                                      The Western Cape: Africa’s growing
                                                                      greentech hub 61
Emerging opportunities, drivers and barriers 39
4.1. Market drivers 41
     4.1.1. The decreasing cost of utility-scale renewable energy 41
     4.1.2. Policy drivers of market size 42
     4.1.3. Other related drivers 42
4.2. Market opportunities 43
     4.2.1. Continuation of the REIPPPP based on the IRP 2019 allocations 43
     4.2.2. Increased local manufacturing 45
     4.2.3. Distributed generation (1-10MW) 50
     4.2.4. Utility-scale battery storage 52
4.3. Market barriers and uncertainties 54
     4.3.1. Ensuring continuity and transparency 54
     4.3.2. Maintaining the country’s existing manufacturing base 54
     4.3.3. Eskom unbundling – reforming the country’s electricity sector 54                                                       References 67

                                            Figure 1:    Commencement and timeline of REIPPPP in South Africa                                            9
                                            Figure 2:    Key utility renewable energy movements in South Africa to date                             14-16
                                            Figure 3:    Governance structure of IPPO                                                                  20
                                            Figure 4:    IPPO procurement process                                                                       21
                                            Figure 5:    Countries from which private investments in the REIPPPP were made                             25
                                            Figure 6:    Policy adjusted plan IRP 2019                                                                 31
                                            Figure 7 :   Renewable energy value chain                                                                  33
                                            Figure 8:    Typical company types involved at different stages of project life                           34
                                            Figure 9:    Policies guiding South Africa’s economic growth trajectory                                    37
                                            Figure 10:   Eco-system of policies relating to the REIPPPP                                                38
                                            Figure 11:   Tariff decline and capacity awarded for solar PV and onshore wind across all bid windows      41
                                            Figure 12:   Relative ease of localisation in wind value chain                                             48

Table 1:    Summary of market opportunities within the utility-scale renewable energy market                                             3
Table 2:    Additional drivers in the South African renewable energy market                                                             17
Table 3:    Key policy movements in the establishment of the renewable energy sector in SA                                              19
Table 4:    As of end of 2020, the breakdown of the large-scale and small-scale REIPPPP procured, determined and operational capacity
            allocations across all renewable energy technologies                                                                        23
Table 5:    Tariffs offered by solar PV, wind, and CSP projects over bid windows [R/kWh]                                                24
Table 6:    Actual procured generation capacities per REIPPPP bid window                                                                26
Table 7:    Summary of the developments and revisions of South Africa’s IRP from 2010 – 2019 as well as key planning assumptions        28
Table 8:    Capacities for least-cost plan by year 2030                                                                                 29
Table 9:    Capacities for least-cost plan by 2030 with annual build limits on renewable energy                                         29
Table 10:   New additional capacity by 2030 based on IRP 2019:                                                                          32
Table 11:   Future pipeline based on IRP 2019 allocations                                                                               32
Table 12:   Climate Change Agreements of which South Africa is a signatory.                                                             42
Table 13:   Procurement outstanding based on IRP adjustments from 2010 – 2019                                                           44
Table 14:   Average local content as a percentage of total project cost versus threshold and targets                                    45
Table 15:   dtic’s and National Treasury designated sectors instruction number 2 of 2016/2017; list of solar PV component designated

                                                                                                                                             UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
            for local production                                                                                                        47
Table 16:   Estimate of number of manufacturing facilities and job creation potential for wind turbine localisation for IRP2019 build   49
Table 17:   South African pricing markers for Li-ion storage system sizes focused on smaller scale installations                        53
Table 18:   Eskom unbundling highlights                                                                                                 56


                                            BW      Bid window                                              ICN      International Cleantech Network
                                            CAGR    Compound annual growth rate                             IDC      Industrial Development Corporation
                                            CCA     Customs controlled area                                 IDZ      Industrial Development Zone
                                            CCGE    Closed Cycle Gas Engine                                 IEA      International Energy Agency
                                            CCGT    Closed Cycle Gas Turbine                                IEC      International Electrotechnical Commission
                                            CCT     City of Cape Town                                       IEP      Integrated Energy Plan
                                            COD     Commercial operation date                               IFC      International Finance Corporation
                                            CPUT    Cape Peninsula University of Technology                 ISMO     Independent System and Market Operator
                                            CSIR    Council for Scientific and Industrial Research          IPP      Independent Power Producer
                                            CSP     Concentrated solar power                                IPPO     Independent Power Producers Office
                                            DBSA    Development Bank of Southern Africa                     IRP      Integrated Resource Plan
                                            DE      Distribution entity                                     kWh      Kilowatt-hour
                                            DEA     Department of Environmental Affairs                     LCOE     Levelised cost of energy
                                            DG/EG   Distributed Generation/Embedded Generation              LIB      Lithium-ion battery
                                            DMRE    Department of Mineral Resources and Energy              Li-ion   Lithium-ion
                                            DSI     Department of Science and Innovation                    LMO      Lithium manganese dioxide

                                            dtic    Department of Trade, Industry and Competition           LNG      Liquefied natural gas
                                            EAF     Energy availability factor                              MCSA     Minerals Council South Africa
                                            ED      Economic development                                    MEC      Maximum Export Capacity
                                            EDD     Economic Development Department                         MES      Minimum Emission Standard
                                            EKF     Danmarks Eksportkredit (Denmark Export Credit Agency)   MoA      Memorandum of agreement
                                            EOI     Expression of interest                                  MTPPP    Medium Term Power Purchase Procurement
                                            EPC     Engineering, procurement and construction               MWp      Megawatt peak
                                            ERA     Electricity Regulation Act No 4 of 2006                 NDP      National Development Plan

                                            ETI     Employment tax incentive                                NEDLAC   National Economic Development and Labour Council
                                            GE      Generation entity                                       NMC      Nickel manganese cobalt
                                            GWp     Gigawatt peak                                           OCGT     Open cycle gas turbine
                                            ICE     Internal Combustion Engine                              OEM      Original equipment manufacturer
O&M       Operation and maintenance                          UNCTAD     United Nations Conference on Trade and Development
PCE       Portfolio Committee on Energy                      VFRB       Vanadium flox redox battery
PPA       Power purchase agreement                           VRE        Variable Renewable Energy
PPD       Peak Plateau Decline                               WACC       Weighted Average Cost of Capital
PPPFA     Preferential Procurement Policy Framework Act
PV        Photovoltaic
R&D       Research and development
RE        Renewable energy
RECP      Renewable Energy Cooperation Programme
REFIT     Renewable energy feed-in-tariff                    Exchange rate used: 1 US Dollar = R16.64 (October 2020)
REIPPPP   Renewable Energy Independent Power
          Producer Procurement Programme
RFBs      Request for Bids
RFP       Request for proposal
RMB       Rand Merchant Bank
RMIPPPP   Risk Mitigation Independent Producer

                                                                                                                             vii UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
          Procurement Programme
SAESA     South African Energy Storage Association
SAPVIA    South African Photovoltaic Industry Association
SAREM     South African Renewable Energy Masterplan
SARETEC   South African Renewable Energy Technology Centre
SAWEA     South African Wind Energy Association
SED       Socio-economic development
SEZ       Special Economic Zone
SIPs      Strategic infrastructure projects
SMC       Supply Management Chain
SSEG      Small-scale embedded generation
TE        Transmission Entity

                                            This market intelligence report is compiled for foreign direct and local investors that are looking to invest
                                            directly in the South African green economy through project development, asset management, equity, debt,
                                            equipment manufacturing, or support services. It highlights market opportunities in the utility-scale renewable
                                            energy market in South Africa.

                                            South Africa has a single utility      Procurement Programme              Key developments influencing the    or buy new generation capacity
                                            model managed by the state-            (REIPPPP). Of this, just over      market in 2020/21:                  and develop their own power
                                            owned entity, Eskom, with a total      4 GW is already connected to                                           generation projects.

                                            installed generation capacity of       the national electricity grid,     • The Department of Mineral
                                            48 GW. This capacity is currently      with the balance expected            Resources and Energy (DMRE)      • The Section 34 Determination
                                            dominated by coal-power                to be connected by 2020/21.          has gazetted amendments to         enables the DMRE to undertake
                                            stations (over 80%).                   The cost of renewable energy         the Electricity Regulations on     procurement of additional
                                                                                   projects continues to decrease,      New Generation Capacity. The       electricity capacity in
                                            Since the establishment of the         with projects in the most recent     amendments clarify the regime      accordance with the Integrated
                                            Independent Power Producers            rounds (round 4 of the REIPPPP)      applicable to municipalities       Resource Plan (IRP 2019). The
                                            Office (IPPO) in 2010, more than 6.4   producing a levelised cost of        when requesting determinations     capacity determined is 11.3 GW of

                                            GW of electricity from renewable       energy of less than R0.61/kWh.       under Section 34 of the            generation and 513 MW of energy
                                            energy sources has been procured                                            Electricity Amendment Act, and     storage, including 6 800 MW
                                            through the Renewable Energy                                                enable municipalities in good      renewable energy generation.
                                            Independent Power Producers                                                 financial standing to procure
• A request for proposals for new       these preferred bidders include       from onshore wind and 1 000         IRP 2019 allocations is R99 billion
  generation capacity of 2 000          a combination of a range of           MW from solar photovoltaic.         for solar PV, R271 billion for wind,
  MW under the Risk Mitigation          technologies that are solar PV,                                           and R48 billion for distributed
  Independent Power Producer            wind, liquefied gas and battery      In addition to the Integrated        generation of less than 10 MW.
  Procurement Programme                 storage. These eight projects will   Resource Plan (IRP) gazetted in
  (RMIPPPP) was issued in August        inject a total of private sector     October 2019, these developments     This available market will depend
  2020, with the closing date           investment amount of R45 billion     suggest significant growth           largely on (1) the commencement
  extended to December 2020. In         into the country’s economy.          opportunities in the utility-scale   of new bid windows of the REIPPP
  March 2021, DMRE announced                                                 renewable energy market over         programme against the IRP 2019
  the eight preferred bidders          • On 19th March 2021, the DMRE        the next ten years (2020 – 2030).    allocations; (2) local content
  totalling 1845 MW and a further        released a Request for Proposals    Based on the R/MW overnight          requirements; (3) the licensing
  three eligible bids totalling 150      (RFPs) for a new bid window         capital cost per technology (as      requirements for distributed
  MW (these three bids are subject       under REIPPPP (BW 5). The RFP       per the IPPO quarterly reports),     generation; and (4) the finalisation
  to value for money propositions        calls for proposals from IPPs to    the approximate available South      of Eskom’s unbundling process
  in line with the provisions in the     develop new generation capacity     African utility-scale renewable      and legal establishment of the
  RFP). The solutions provided by        of 2 600 MW, including 1 600 MW     energy market value based on         transmission entity.

                                                                                                                               Wind turbine manufacturing
                                                                                                                               at GRI Renewable Industries,
                                                                                                                                 Atlantis Special Economic
                                                                                                                               Zone for green technologies.

                                                                                                                                                              UTILITY-SCALE RENEWABLE ENERGY: MIR 2021

                                            Table 1: Summary of market opportunities within the utility-scale renewable energy market

                                                Opportunity         Stakeholders              Key drivers                              Barriers                      Term              Macro impact

                                                Continuation        • IPPs, EPCs, OEMs,       • 6 800 MW, 4th determination            • Consistency and scale       Short to          • Energy security, load shedding
                                                of the REIPPPP        O&Ms                    • Expected 35 GW decommissioned            of procurement              medium term         reduce
                                                based on the IRP    • Local                     coal by 2050                                                         (1-5 years)       - Economy & jobs recovery-
                                                2019 allocations      manufacturers           • Eskom EAF restraints                                                                   • Eskom’s dire financial situation
                                                                    • Financiers                                                                                                       • Just Transition
                                                                                                                                                                                       • South African Infrastructure

                                                Increased local     • Local manufacturers,    • Increased local content requirements   • Energy and industrial       Medium to         • Job transition for the coal
                                                manufacturing         OEMs, EPCs                from upcoming REIPPPP rounds             policy uncertainty          long term           sector
                                                of renewable        • DTIC, DMRE, IPPO        • Eskom’s Just Energy Transition         • The business case for       (3-10 years)      • Disrupted economy due
                                                energy                                          plans, risk of stranded assets           local manufacturing still                       to COVID-19 impacts on
                                                components and                                  (repurposing sites)                      depends on restrictive                          the economy and
                                                systems                                                                                  trade policies                                  unemployment rates
                                                                                              • Local manufacturing support
                                                                                                through the REDZ, IDZs, SEZs, RE
                                                                                                corridors, etc.

                                                Distributed         • Municipalities          • Municipalities in good financial       • Policy uncertainty          Short term        • Increasing cost of Eskom’s
                                                generation (1–10    • Mining companies          standing can apply to procure new        on third party              (1–3 years)         electricity
                                                MW as per the                                   generation capacity                      transactions                                  • Eskom’s EAF: Availability and
                                                                    • Industrialists
                                                IRP 2019)                                     • Mining sector allowed to self-         • Private PPAs                                    reliability of energy supply1
                                                                      and commercial
                                                                                                generate, only required to register      structuring

                                                                                                with NERSA
                                                                    • Eskom
                                                                                              • Wheeling opportunities
                                                                    • IPPs
                                                                                              • Uncapped capacity from 2019 to
                                                                                                2022 in IRP 2019
                                                                                              • Hybrid solutions and competitive
                                                                                                tariff prices

                                             REIPPPP – Renewable Energy Independent Power Producers Procurement Programme; DMRE – Department of Mineral Resources and Energy; dtic – Department of Trade, Industry
                                            and Competition; REDZ – Renewable Energy Development Zone; IDZ – Industrial Development Zone; SEZ – Special Economic Zone; MEC – Maximum Export Capacity; EPC – Engineering
                                            Procurement Construction; OEM – Original Equipment Manufacturer; IPPs – Independent Power Producers; O&M – Operation & Maintenance; IPPO – Independent Power Producers Office;
                                            EAF – Energy Availability Factor
Opportunity       Stakeholders             Key drivers                           Barriers                   Term          Macro impact

Utility-scale     • IPPs, EPCs, O&Ms       • Battery Energy Storage System       • Price of batteries in    Medium term   • Price of battery storage
battery energy    • Local manufacturers,     (BESS) – (min. 80 MW/320 MWh          South Africa market –    (5 years)       declining (global)
storage             financiers               usable capacity for seven months)     deviates from least-                   • CEP (Clean Energy Portfolio)
development and                            • Global financing institutions         cost path                                thus Wind, Solar, Storage
                  • Mining sector
deployment                                                                       • Limited policy on                        compared to Gas as
                                           • Grid stability use case
                                                                                   battery integration                      balancing generation
                                                                                 • Lack of infrastructure
                                                                                   and R&D studies

                                                                                                                                                              UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
                                                                                                                                     Component cleaning at
                                                                                                                                      Perdekraal Wind Farm.
                                                                                                                                          Renewable Power


                                            WHAT’S                                                                                                                         CLICK HERE
                                                                                                                                                                          TO WATCH A

                                                                                                                                                                        SUMMARY OF THE
                                                                                                                                                                       2021 UTILITY-SCALE
                                                                                                                                                                          ENERGY MIR

                                            Since the publication of the 2020 Utility-Scale Renewable Energy Market Intelligence Report (MIR),
                                            there have been several important developments in the sector and in the national government’s
                                            Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).

                                            What happened in 2020:                • March: The COVID-19 case rate        • April: Eskom issues several      • June: DMRE approves the
                                                                                    increases in South Africa. Like        force majeure notices to           refinancing initiative for projects
                                            • February: The Minister of Mineral     many countries, the national           operators of independent           bid window 1 – 3.5 IPPs (sellers)

                                              Resources and Energy (DMRE),          government implements                  wind power plants, with lower      that are in operation, to reduce
                                              Gwede Mantashe, sends two             national restrictions (“lockdown       demand caused by the country’s     tariffs over the remainder of
                                              draft ministerial determinations      regulations”) to reduce the            lockdown in response to the        the PPA term. At the time
                                              (the Proposed Determinations),        spread of the virus. This included     COVID-19 pandemic reported         of writing, 70% of the 64
                                              prepared under section 34 of          the limiting of active business        as the reason.                     operational IPPs have indicated
                                              the Electricity Regulation Act,       activity. The lockdown, coupled                                           they will participate in the
                                              to the National Energy Regulator      with reduced international trade,    • April: Eskom System Operator       refinancing initiative.
                                              of South Africa (NERSA).              sees the South African gross           and General Manager

                                                                                    domestic product (GDP) shrink          Telecommunications, Tshifhiwa    • July: Request for Bids for
                                                                                    by 51% in quarter two of 2020.         Bernard Magoro, appointed as       Eskom’s first package
                                                                                                                           new head of the Independent        Battery Energy Storage
                                                                                                                           Power Producers Office (IPPO).     Program advertised.
• August: Independent Power           Rolling blackouts (load shedding)     This MIR updates 2020 report          • The DMRE welcomed NERSA’s
  Producers Office (IPPO) issues      continued throughout 2019 and         highlights:                             concurrence to the ministerial
  Request for Proposals (RFP)         2020 with Eskom being unable                                                  determination for the
  for 2 000 MW Risk Mitigation        to match current demand with          Changes in opportunity drivers/         procurement of 11 813 MW of
  Independent Power Producers         available supply. In March            enabling environment:                   power with 4 800 MW (wind),
  Programme (RMIPPPP) with an         2020, the country’s electricity                                               2 000 MW (solar PV) and 518 MW
  initial due date of 24 November;    demand dropped by more than           • The DMRE gazetted                     for renewable energy storage; and
  then extends bid deadline           6 000 MW immediately after              amendments to the Electricity
  submission to 22 December.          nationwide implementation of            Regulations on New Generation       • The DMRE has released a
                                      Level 5 lockdown regulations. This      Capacity, enabling municipalities     Request for Proposals (RFPs)
• September: DMRE determines          allowed Eskom the opportunity to        in good financial standing to         for a new bid window under
  6 800 MW to be procured to          conduct short-term maintenance          procure new generation capacity       REIPPPP (BW 5). The RFP calls for
  be generated from renewable         and repairs. A total of 9 000 MW        in line with the IRP 2019;            proposals from IPPs to develop
  energy sources (solar: 2 000 MW     generating units were taken offline                                           new generation capacity of 2 600
  and onshore wind: 4 800 MW)         to preserve the integrity of the      • The DMRE revised Schedule 2           MW, including 1 600 MW from
  and 513 MW to be generated          systems, that would be available        of the Electricity Act, enabling      onshore wind and 1 000 MW from
  from storage. In total, this will   at short notice if required. A          self-generation and facilitating      solar photovoltaic.
  enable the development of an        slight relaxation of the lockdown       municipal generation under
  additional 11 813 MW of power       regulations from Level 5 to Level       “Distributed Generation”.           • Minister Gwede Mantashe
  by 2030.                            3 saw the bulk of industries            Generation plants may only            announced that the licensing
                                      returning to business. As the           require registration;                 threshold for embedded

                                                                                                                                                        UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
• October: DMRE gazettes the          economic lockdown eased, the                                                  generation is increased from 1
  amendments to the Electricity       utility immediately implemented                                               MW to 10 MW. In order to connect
  Regulations on New Generation       staged load shedding to deal                                                  to the grid and/or trade surplus
  Capacity, enabling municipalities   with a surge in energy demand.                                                energy capacity, there is a
  in good financial standing          Eskom’s CEO confirmed that there                                              requirement for license. Self-
  to develop their own power          would be an increased risk of load                                            generation plants of any size
  generation projects.                shedding for another 12 months                                                do not require a license and
                                      from August 2020.                                                             there is no limit.

                                                                     AND PURPOSE

                                               This market intelligence report is compiled for foreign direct and local investors that are
                                             looking to invest directly in the South African green economy through project development,
                                            asset management, equity, debt, equipment manufacturing, or support services. It highlights

                                                  market opportunities in the utility-scale renewable energy market in South Africa.
Globally, the impact of COVID-19     The share of renewables in capacity     As shown in Figure 1, the             To facilitate the uptake of
has been significant. Global         expansion continued its upward          introduction of renewable energy      renewable energy in South Africa,
energy demand declined by 3.8%       trend to reach 72% in 2019/20.          in the South African context dates    as detailed in the 2010 IRP, the
in the first quarter of 2020, with   Similarly, the renewable share of       back to 2003 with the delivery        Renewable Energy Independent
most of the impact felt in March     total generation capacity rose from     of the 2003 White Paper on            Power Producer Procurement
as confinement measures were         33.3% in 2018 to 34.7% in 2019/20. At   Renewable Energy. However, only       Programme (REIPPPP) was
enforced in Europe, North America,   the end of 2019 and the beginning of    with the release of the Integrated    established. The Independent
and elsewhere. The demand for        2020, global renewable generation       Resource Plan (IRP) 2010-2030 in      Power Procurement Office (IPPO)
coal, gas, and oil decreased by      capacity amounted to 2 537 GW.          2010 did the renewable energy         was created to fulfil three specific
between 2% and 8%. Renewables        Renewable generation capacity           framework start to take shape.        duties for the REIPPPP:
were the only source that posted     increased by 176 GW (+7.4%) in 2019,    The purpose of the IRP 2010 was to
growth in demand, driven by larger   led by solar PV, wind energy, and       determine the preferred energy mix    • professional advisory services;
installed capacity compared to       hydropower (IRENA 2020). Solar          over the next 20 years. It included   • procurement management
other generation sources and         PV capacity expanded the most           determinations for renewable            services; and
priority dispatch (International     (98 GW) (IEA Renewables, 2020).         energy amounting to 14 725 MW,        • monitoring, evaluation, and
Energy Agency.,2020).                Meanwhile, onshore wind additions       coal-fired plants of 6 250 MW, and      contract management services.
                                     totalled 59 GW, and hydropower          gas-fired power plants of 3 726 MW.
                                     growth increased by 12 GW. The
     During the 2020 COVID-19        key economic drivers behind this
    pandemic, renewables were        global increase were government
      the only source of energy      policy support, dedicated
       that posted a growth in       procurement programmes, and
    demand internationally. On       continually decreasing operating

                                                                                                                                                          UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
     the back of low operating       and technology costs.
  costs and preferential access
    to many power systems, the       The South African renewable
     share of renewables in the      energy market is following
  electricity generation mix rose    a similar trend to the global
     considerably, with record-      breakdown detailed above in
  high hourly shares of variable     terms of technology choice.
   renewables across the world.      Solar PV and onshore wind are
                                     dominating the market growth,
                                     backed by a growing small-scale
                                                                               Gouda Wind Farm,
                                     embedded generation market                Western Cape.
                                     (mostly solar for commercial              ©Nicholas Fordyce

                                     and industrial businesses).

Figure 1: Commencement and timeline of REIPPPP in South Africa

                                                   2003                   -
                                                                                           2010                 2018          2018         2019          2019

                                                 White Paper                            Establishment                           IRP                   Determination
                                                   on RE                                 of IPP office                      22.4 GW RE                 of 11.8 GW RE

                                                                          IRP                                  Procured                      IRP
                                                                      Energy Mix                             6.3 GW of RE                24.4 GW RE
                                                                     (14.7 GW RE)
In October 2019, the IRP 2019                        Given this context, there are         In what follows:                     Note: GreenCape’s Energy Services
with the preferred energy mix                        several opportunities for potential                                        Market Intelligence Report
up until 2030 was released. The                      investors in the renewable energy     Section 2 gives an overview of       explores the energy services
plan includes determinations                         market in South Africa. This Market   the sector and describes the         market, including the embedded
for additional renewable energy                      Intelligence Report (MIR) provides    market size and key players.         generation renewable energy
amounting to 20 400 MW (excluding                    potential investors in the utility-   Section 3 details the general        market and energy efficiency.
distributed generation of 4 GW),                     scale renewable energy space with     legislative and regulatory           The energy services market is
coal-fired plants of 1 500 MW, and                   a greater understanding of market     framework governing                  thus not covered in this Utility-
gas-fired power plants of 3 100 MW.                  opportunities in South Africa,        renewable energy.                    Scale Renewable Energy Market
                                                     taking into account the size of       Section 4 highlights emerging        Intelligence Report.
To begin the procurement process                     the opportunities and the level       opportunities, drivers,
after the publishing of the South                    of risk involved.                     and barriers.
African national IRP for electricity,                                                      Section 5 focuses on funding
the Minister of Mineral Resources                    The MIR is compiled for foreign       and incentives.
and Energy gazetted two Section                      direct and local investors (persons   Section 6 gives an overview of the           CLICK HERE
34 determinations2 related to the                    or organisations) that are looking    Western Cape as Africa’s growing
                                                                                                                                         TO EMAIL
procurement of 2 000 MW of new                       to invest directly in the utility-    greentech hub.
generation capacity under the                        scale renewable energy market         Section 7 focuses on the services
Risk Mitigation Independent Power                    through project development,          that GreenCape provides to
Producer Procurement Programme                       asset management, equity, debt,       its members.
(RMIPPPP) between 2019 and 2022,                     equipment manufacture, or
and the procurement of a further 11                  support services.
813 MW between 2022 and 2027.

                                                                                                                                                                    UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
    Under the Electricity Regulation Act 4 of 2006


                                             The South African utility-scale renewable energy accounts for approximately 14% of the
                                            available installed capacity. The industry is showing growth and potential with more than
                                                            4.3 GW of utility-scale projects connected and operational.
Wind turbine construction at
    Perdekraal, Western Cape.
©Mainstream Renewable Power

                                 UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
This section gives an overview          Since 2010 there has been a              2.2. The development of              Nevertheless, the 2011
                                            of the market, describing the           distinct decline in electricity          utility-scale renewable              promulgation of the IRP 2010 –
                                            market size (present and future),       demand (87% in 2010 compared             energy in South Africa               2030 Policy Adjusted Plan issued
                                            and providing a breakdown of            to 79% in 2019) (Wright & Calitz,                                             by the then Department of Energy
                                            the basic renewable energy value        2020). A historic imbalance of           The introduction of renewable        (DoE) had the greatest impact on
                                            chain and key players. The section      supply and demand in South               energy into national energy          the renewable energy sector. The
                                            aims to provide foundational            Africa’s single buyer energy             planning extends as far back         Integrated Resource Plan (IRP)
                                            information needed to explore the       model over more than ten years           as the 1998 White Paper on the       was adopted as the official long-
                                            investment opportunities in the         resulted in intensive load shedding      Energy Policy of South Africa. The   term government plan for new
                                            South African renewable energy          experienced country-wide during          policy committed to encouraging      electricity generation capacity
                                            market.                                 2019 and the first half of 2020. An      private sector participation,        inclusive of project timelines. It
                                                                                    estimated 1.3 TWh, 530 hours, were       competition, and open, non-          estimated planned generation
                                            2.1. South African                      loadshed during these periods            discriminatory access to the         capacities contributing to the
                                            electricity landscape                   with up to Stage 6 load shedding         transmission system.                 overall energy mix.
                                                                                    implemented, which had a
                                            South Africa’s electricity supply is    significant impact on the economy        The sector was further supported     The IRP aims to double the
                                            currently dominated by coal-fired       (R 60 – 120 billion) (Wright & Calitz,   by the 2003 White Paper on           electricity capacity through a
                                            power generation. The country has       2020). Load shedding has been            Renewable Energy, by which           diversified energy mix; mainly
                                            coal-fired generation stations with     driven by a combination of               the government set a target of       coal, gas, nuclear, and renewable
                                            an installed capacity of between        factors, including:                      10 000 GWh renewable energy          energy. Figure 2 on pages 14, 15
                                            36.5 GW and 40 GW. This represents                                               consumption by 2013, and NERSA’s     and 16, illustrates some of the
                                            more than 80% of the country’s          • delayed commissioning and              approval in 2009 of the policy and   essential utility renewable energy
                                            total installed capacity, amounting       underperformance of new-build          tariffs for a Renewable Energy       developments in South Africa

                                            to 48 GW (Department of Energy            coal generation capacity;              Feed-in Tariff (REFIT) programme.    to date, with additional drivers
                                            2019). These stations are primarily     • degradation of the existing                                                 affecting the market listed in
                                            owned and operated by Eskom, the          Eskom coal fleet energy                                                     Table 2 (page 17).
                                            national power utility. Eskom             availability factor (EAF)
                                            supplies ~95% of South Africa’s total     declining from ~94% in 2002
                                            electricity demand. The remaining         to 67% in 2019/20.
                                            5% is met through municipalities,
                                            imports, and independent power

                                            producers (IPPs).
Figure 2: Key utility renewable energy movements in South Africa to date

                                                                                                                                                                           Dec 15
                                                                                                                                                             COGEN determination
                                                                                                                                                                       1 000 MW
                                                                                                                                                                                      Aug 15
                                                       Nov 11                                                                                                                         3rd RE
                                                       Launch of                                                                                                                      determination
                                                       REIPPPP through                                                                                                                6 300 MW
                                                       submission date                                                                                                       Jun 15
                                                       Bid Window (BW) 1                                                                                              13 additional
                                              Aug 11                                                          Aug 13                                                bidders – BW 4
                                              1st RE                                                      Submission                                                                  Apr 15
                                     determination                                                         date BW 3                                                                  13 preferred
                                          3 725 MW                                                                     May 13                                                         bidders
                                                       2011                                                            Signing of PPA                                                 announced –
                                                       IRP 2010 to 2030                                                BW 2                                                           BW 4

             2010                             2011                              2012                            2013                         2014                            2015

                   2003                                                                  Mar 12                                                       Mar 14
                   White paper on                                                        Submission                                                   Submission
                   RE in RSA                                                             Date BW 2                                                    date BW 3.5

                                                                                                                                                                                                      UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
                                                                                Nov 12                                                      May 14
                                                                               Signing                                        Tina Joemat-Peterson
                                                                           of PPA BW 1                                            appointed Energy
energy feed-in                                                                           Dec 12                                            Minister
  tariff (REFIT)                                                                         2nd RE determination                                         Aug 14
  consultation                                                                           3 200 MW                                                     Submission date BW 4
          paper                                                               Dec 12                                                         Nov 14
                   2009                                              Coal domestic                                                Submission date –
                   COP 15 – reduce                          determination 2 500 MW                                                        small IPP
                   SA’s carbon                                                           Dec 12                                                       Dec 14
                   emissions by                                                          Gas determination                                            Signing of PPA BW 3
                   34% by 2020                                                           3 126 MW
                                                                           Dec 12
                                                              COGEN determination
                                                                         800 MW

Figure 2: Continued...                                                  Oct 17
                                                                                                   David Mahlobo appointed
                                                                                                            Energy Minister
                                                                                                                               Sep 17
                                                                                                                               Announcement to sign BW 3.5 and 4
                                                                                                                               by end Oct. Projects under 77c/kWh
                                                                                                                    End Aug
                                                                                                        Central Energy Fund
                                                                                                    expected to oversee IPPO
                                                                                                                               Jul 17
                                                                                                                               Acting Eskom CEO Johnny
                                                                                                                               Dladla appointed
                                                                                                                     Jun 17
                                                                                                          Acting Eskom CEO
                                                                                                            Koko suspended
                                                                                                                               Mar 17
                                                                                                                               Mmamoloko Nkhensani
                                                                                                                               Kubayi appointed
                                                                                                                               Energy Minister

                                                                                     20162017 2017                                                    2018

                                                                                                Mar 16                                                          Feb 18
                                                                                                Gas determination                                               Jeff Radebe appointed
                                                                                                600 MW                                                          Energy Minister

                                                                                       Apr 16                                                          Apr 18
                                                                           Cross border coal                                       Signing of 27 IPP projects
                                                                                   3 750 MW                                           from BW 4 and BW 3.5
                                                                                                May 16                                                          Aug 18
                                                                                                Signing of PPA BW 3.5                                           Release of IRP 2018: 8
                                                                                      May 16                                                                    100 MW gas/diesel
                                                                                 Solar parks                                                                    8 100 MW wind, 5 670
                                                                     determination 1 500 MW                                                                     MW solar, 2 400 MW
                                                                                                Aug 16
                                                                                                COGEN bids due                                                  distributed generation
                                                                                      Sep 16                                                         End 18
                                                                           Preferred bidders                                     Power requirement for 2019
                                                                                     COGEN                                         scheduled maintenance.
                                                                                                Oct 16                            Coal and nuclear stations

                                                                                                Two coal projects
                                                                                                announced 863 MW
                                                                                      Nov 16
                                                                           Eskom CEO Brian
                                                                              Molefe resigns
                                                                                                Dec 16
                                                                                                Imported hydro
                                                                                                determination 2 609 MW

                                                                                     Dec 16

                                                                            Coal RFP issued
Figure 2: Continued...                                  Dec 19              Feb 20
                                  Medium-term Power Purchase                DMRE, under revised Schedule 2 of the
                                   Procurement (MTPPP) – Risk               Electricity Act, enabled self-generation and
                                        mitigation programme                facilitating municipal generation under
                                                                            “Distributed Generation”. Generation plant
                                                          Oct 19            may only require registration
                                             Release of IRP 2019:
                                14 400 MW wind; 6 000 MW solar;             Apr 20
                         1 860 MW nuclear; 3 000 MW gas/diesel;             DBSA announced Tshifiwa
                               4 000 MW distributed generation              Bernard Magoro as the new
                                                                            head of the Independent
                                                         Jul 19             Power Producer Office (IPPO)
                             Advocate Sandra Coetzee replaces               effective from 1 May
                             Karen Breytenbach as head of IPPO

                                                           2019      2020                           2020

                                                                                                               Jul 20
                                                            May 19
                                                                                                               DMRE/IPPO developed and issued
                                         DMRE publishes letter of

                                                                                                                                                        UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
                                                                                                               a refinancing protocol to ensure
                                    deviation from IRP2010-30 for
                                                                                                               a standardised approach to the
                                     generation facilities ranging
                                                                                                               preparation and assessment of all
                                             above 1MW to 10MW
                                                                                                               refinancing applications received
                                                                                                   Aug 20
                                                         May 19       IPPO/ DMRE RFP issued for 2 000 MW
                                     Gwede Mantashe appointed           Risk Mitigation Independent Power
                                          as Minister of Mineral         Producers Programme (RMIPPPP)
                                                                                                               Sep 20
                                         Resources and Energy
                                                                                                               DMRE signs off Section 4 Ministerial
                                                                                                               determinations: 4 800 MW of wind;
                                                            2019                                               2 000 MW of solar; 3 000 MW of gas or
                                           Coal plants scheduled                                               diesel to power; 1 500 MW of new coal;
                                               for shutdown and                                                513 MW of energy storage
                                                    maintenance                                      Oct 20
                                                                           DMRE gazettes amendments to
                                                                             the Electricity Regulations on
                                                                            Generation Capacity, enabling
                                                                           municipalities in good financial
                                                                           standing to buy or procure new
                                                                            generation capacity under IRP

Beyond these key milestones in the South African utility renewable energy market,
                                            Table 2 below details additional drivers that have moved the market forward.

                                            Table 2: Additional drivers in the South African renewable energy market

                                                                Date                                                                                      Movement

                                                                                             CSIR Energy Centre Report highlights the actual tariffs from REIPPPP and coal IPP, showing how cheap renewable energy builds
                                                           December 2016
                                                                                             have been.

                                                                                             Reason for not signing IPPs announced by the Minister of Energy — decreased growth below 2%, resulting in lower demand
                                                            January 2017
                                                                                             for electricity.

                                                                                             Western Cape High Court judgement nullifies the government’s nuclear agreements for failing to consult the public and undertake
                                                              April 2017                     due processes. Minister of Energy decides to review all determinations after nuclear judgement. This is one of the main reasons for
                                                                                             no response on municipal section 34 requests.3

                                                              July 2017                      City of Cape Town files court application to purchase from IPPs.

                                                                                             Public consultations for Atlantis Special Economic Zone (SEZ) for Green Technologies to inform best business practice frameworks for
                                                            Sep/Oct 2017
                                                                                             local manufacturing facilities keen to launch within the zone.

                                                                                             Launch of Atlantis SEZ for Green Technologies, with national Department of Trade, Industry and Competition (dtic) encouraging
                                                              Dec 2018
                                                                                             Greentech investment through incentives.

                                                                                             Department of Public Enterprises (DPE) announces official plan for the unbundling of Eskom into three separate entities,

                                                            October 2019
                                                                                             i.e. generation, transmission, and distribution, by 2021

                                                                                             The City of Cape Town has been in dispute with government and NERSA on whether it has the right to contract directly with IPPs since
                                                            August 2020                      2015. The dispute was referred back to the parties in terms of section 41 of the Intergovernmental Relations Framework Act, 2005. All
                                                                                             efforts to settle the dispute in terms of Chapter 4 of the Act were unsuccessful

                                                                                             Industrial Policy Action Plan (2020); Focusing on the manufacturing aspects of the green economy, namely green industries and
                                                          2017/17 – 2019/20                  industrial energy efficiency, and is aiming to support broad-based industrialisation, including more advanced manufacturing,
                                                                                             encouraging cleaner, lower-energy technologies and green jobs.

                                             A Section 34 request entails a request to the Minister of Energy to make a determination against the IRP for the procurement of energy generation as detailed under
                                            section 34(1) of the Electricity Regulation Act 4 of 2006.
Although renewable energy in the          • Wind and solar energy are
South African context dates back            competing on a levelised cost
to 1998 with the delivery of the            of electricity basis with coal
1998 White Paper on Energy Policy,          and nuclear.
it is still a relatively new market
in South Africa, with the first           The biggest development
commercial utility projects coming        and driver of the utility-scale
online in 2013. At the time of writing,   renewable energy market in South
6 422 MW of renewable energy              Africa was the establishment of
had been procured through the             the REIPPPP in 2011.
Renewable Energy Independent
Power Producer Procurement                2.3. The Renewable Energy
Programme (REIPPPP), with                 Independent Power
4 276 MW generation capacity              Producer Procurement
added to the national grid (IPPO          Programme
2020). Since the first project
became operational in November            Over the last two decades,
2013, 49 461 GWh of energy has            the South African utility-scale
been generated by renewable               renewable energy model evolved,
energy sources procured under             with some refinements. These
the REIPPPP.                              include the IRP 2010-30, the
                                          establishment of the IPP office,
The growth of SA’s renewable              and ultimate cancellation of the

                                                                                                              UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
energy industry in recent years is        renewable energy feed-in-tariff
the result of several factors:            (REFIT) programme. Key policy
                                          movements are summarised in
• Proactive government                    Table 3 on page 19.
  policy in procuring renewable
  energy capacity;

• Increases in electricity tariffs
  charged by the national
  utility, Eskom;
                                                                               Assembling a wind turbine at
                                                                                 Perdekraal, Western Cape.
                                                                             ©Mainstream Renewable Power

Table 3: Key policy movements in the establishment of the renewable energy sector in SA

                                                                                     Initiation                                                          Transition                                Consolidation

                                                    Pivotal            RE policy uncertainty                     Programme               Bid Window 1-2 [nascent market                Bid Window 3-4 [competitive market]
                                                   movements                                                     development             – high returns]

                                                     Timeline          1998 – 2008                               2009 – 2010             2011 – 2013                                   2014 – present

                                                                       1998 White Paper on Energy                2009 – Renewable        2011 – Department of Mineral Resources        Nuclear debate
                                                                                                                 energy feed-in-tariff   and Energy (DMRE)5 abandons REFIT for
                                                                                                                 (REFIT) 4 phase 2       the competitive tender process
                                                                                                                 launched by NERSA

                                                                       2003 White Paper on RE                    2009 – COP 15           2011 – 1st determination: 3 725 MW            Delay in Bid Window 4 (BW4)
                                                                                                                 commitments                                                           announcement – job losses as a result

                                                                       2007/08 load shedding                     IRP 2010 – 2030         Aug 2011 – Issue of REIPPPP RFP               April 2018 – Sign BW4

                                                                       2008 – REFIT draft guidelines issued by   2010 – Establishment    Nov 2011 – Bid submission period              August 2018 – Updated IRP released for
                                                                       NERSA                                     of IPP office                                                         public comment

                                                   Government          2008 – Eskom solar hot water rebate       –                       Dec 2011 – Preferred bidder announcement      October 2019 updated IRP released

                                                                       2008 – Energy Act enacted                 –                       11 Dec 2011 – COP 17 in Durban                2020:
                                                                                                                                                                                       • Determination based in new IRP

                                                                                                                                                                                       • Issue of RMIPPPP RFP (2 000 MW)

                                                                       2008 – Commissioning of Darling Wind      –                       2012 – 2nd determination – 3 200 MW           Expected in 2021/22:
                                                                       Farm                                                                                                            • Bid Window 5 announcement
                                                                                                                                                                                       • Issue of REIPPPP RFP
                                                                       –                                         –                       Nov 2012 – Signing of PPA BW1                 • Bid submission
                                                                                                                                                                                       • The signing of PPA BW5
                                                                       –                                         –                       May 2013 – Signing of PPA BW2                 • BW 5 commissioning

                                              REFIT (renewable energy feed-in tariff) programme was a renewable energy programme launched by NERSA in 2009, which was later revised (with developers, lawyers and funders input)
                                            to the REIPPPP, launched in 2011.
                                                Previously refered to as the Department of Energy (DOE)
The major goal with the                       by Eskom, the programme had to                 Department of Energy (DoE) (now               the Independent Power Producer
establishment of a renewable                  have a clear separation of powers.             DMRE) (see Figure 3), National                (IPP) office.
energy programme was to                                                                      Treasury (NT), and the Development
ensure fair competition and                   Central to South Africa’s renewable            Bank of Southern Africa (DBSA) in             In 2016, the MoA was extended
independence, free from undue                 energy programme was the                       2010. A memorandum of agreement               for a further three years, and
influence. With all previous                  establishment of the Independent               (MoA) was concluded between the               then again in April 2019 for
generation, transmission, and                 Power Producer Procurement                     parties, and the DBSA was directed            another year. The MoA has been
share of distribution managed                 Programme (IPPPP) by the former                to support the establishment of               subsequently extended to 2023.

Figure 3: Governance structure of IPPO6
                                                              Energy Plan & Integrated
                                                                   Resource Plan

                                                                      documents                                         National Treasury

                                           Concurrence                         Department of                               Memorandum                       Development Bank
      NERSA                                                                                                                of Agreement
                                          given by Nersa               Mineral Resources and Energy                                                         of Southern Africa

                                                                                                                                                                                 UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
        Draft                                                                        Mandate to
   determination                                     Minister of Mineral                                                  Independent
                                                                                      IPP office
      to Nersa                                      Resources and Energy             to procure
                                                                                                                      Power Producer Office

  DoE (Department of Energy) is now known as the Department of Mineral Resources and Energy (DMRE), established in June 2019 as a merger between the Department of Energy

and Department of Mineral Resources
The IPP office is housed in the        The office is now funded from IPP    Advisory Centre, manages the IPP    The formation of the IPP Office’s
                                            DBSA. It oversees staff, operations,   project fees.                        office account. National Treasury   procurement process, Figure 4,
                                            and procurement of consultants,                                             also provides a guarantee to back   has been lauded as one of the key
                                            goods and services. Initial            The office is an agent of the DMRE   the obligations of Eskom in terms   elements to driving success.
                                            funding was provided as a loan         and is mandated to implement the     of the Power Purchase Agreements
                                            recoverable once an IPP project        IPPPP, whilst National Treasury,     (PPAs) with the IPPs.
                                            reached its financial close stage.     through the Government Technical

                                            Figure 4: IPPO procurement process

                                                                        RFP                                      Preferred                                     Grid
                                                                                             Bid                                        Financial           connection +
                                                                    (request for                                  bidder
                                                                                          submissions                                     close             commercial
                                                                     proposals)                                announcement

                                                                                                                                                                        Wind turbine construction
                                                                                                                                                                                  at GRI, Atlantis.

South Africa’s renewable energy
                                                      REIPPPP highlights to date:               Energy supply capacity impact       The economic impacts of the
market grew exponentially from
                                                      • In the Large REIPPPP, 92                of the REIPPPP (by June 2020):      REIPPPP have included the
the inauguration of the
                                                        projects have reached Financial         • 6 422 MW of electricity had       following (IPPO 2020):
Independent Power Producers
                                                        Close. Construction has not               been procured from 112 RE         • Investment (equity and debt)
Office (IPPO) in 2010 until 2015 when
                                                        yet commenced on one BW3.5                Independent Power Producers         to the value of R209.7 billion, of
delays slowed market growth.
                                                        project that reached Financial            (IPPs) in seven bid rounds.         which R41.8 billion (20%) is foreign
                                                        Close by end July 2019.                 • 4 276 MW of electricity             investment, was attracted;
Up until 2015, the IPPO, with the
                                                      • One BW4 project started                   generation capacity from 68       • Created 52 603 job years1 for
support of the Department of
                                                        operations in the second quarter          IPP projects has been connected     South African citizens to date;
Mineral Resources and Energy
                                                        of 2020, bringing the total to four       to the national grid.             • Socio-economic development
(DMRE), has procured 6 422 MW
                                                        (out of 26) BW4 projects that           • 49 461 GWh of energy has been       contributions of R1.2 billion
of renewable energy generation
                                                        have reached Financial Close.             generated by renewable energy       to date;
IPPO 2019). This has been managed
                                                      • The Smalls programme                      sources procured under the        • Enterprise development
through seven bid windows (BW)7
                                                        and future bid windows are                REIPPPP since the first project     contributions of R384.2 million
in the large-scale REIPPPP, and
                                                        currently on hold, pending                became operational                  to date; and
through two bid rounds in the small
                                                        the implementation of                     in November 2013.                 • Carbon emission reductions1
REIPPPP. At the utility scale, IPPs
                                                        the IRP 2019 and NERSA’s                                                      of 50.2 Mton CO2 have been
are the mechanism through which
                                                        concurrence of the associated                                                 realised by the programme
renewable energy is currently
                                                        ministerial determinations.                                                   from inception to date.
added to the SA energy mix.
In the Western Cape, the IPPO
reports that there are 14 utility                                                              capacity, of which 452 MW (11%       • Active: Onshore wind (452 MW)
scale renewable energy projects                     • 606 MW of renewable energy               of national total) is operational,     and solar PV (134 MW);

                                                                                                                                                                             UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
that have reached commercial                          contracted in the Western Cape;          with 6 047 GWh (12% of national
operation date (COD) in the                         • 452 MW operational from 10               total) electricity generated         • Operational8: Onshore wind (318
province between November 2013                        projects;                                since inception. The technology        MW) and solar PV (134 MW).
and June 2020 (IPPO, 2020).                         • 467 MW is onshore wind; and              breakdown allocations are
                                                    • 134 MW of solar.                         as follows:                          These projects have attracted
According to the IPPO, The                                                                                                          approximately R15.0 billion worth
Western Cape has been allocated                     The Western Cape accounts                  • Procured: Onshore wind (452        of investment and created more
9% of total IPPPP projects                          for 606 MW (9%) of the national              MW), solar PV (134 MW), and        than 11 000 job years in the
procured in SA to date:                             procured renewable energy                    biomass (5 MW);                    province (IPPO 2020).

    Bid windows 1, 2, 3, 3.5, 4 and smalls BW1 (1S2) and BW2 (2S2).
    Operational refers to capacity of projects that have reached COD and excludes projects in Early Operations Period (EOP)

Table 4: The 2020 breakdown of the large-scale and small-scale REIPPPP procured, determined, and operational capacity allocations across all
                                            renewable energy technologies (IPPO June 2020, NERSA determination)

                                                Programmes                                   Large-scale IPP                                                     Small-scale IPP

                                             Technology             Procured            Operational            Determined to date    Procured                Operational            Determined

                                             Wind                   3 357               1 980                  11 160                9                       0                      400

                                             Solar PV               2 292               1 774                  8 225                 80

                                             Concentrated solar     600                 500                    1 200                 0

                                             Landfill gas           13                  22                     540                   0

                                             Small hydro            19                                                               0

                                             Biomass                42                                                               10

                                             Energy Storage         -                   -                      513                   –                       –                      –

                                             Total                  6 323               4 276                  21 638                99                      0                      400

                                            2.4. South Africa utility-            The market presents both                The REIPPPP has attracted                 The REIPPPP has attracted
                                            scale renewable energy                current and future opportunities        investment from prominent                 investment (equity and debt) to
                                            market size                           for investors.                          global renewable energy project           the value of R209.7 billion, with
                                                                                                                          developers and Tier 1 component           foreign investment constituting
                                            The South African utility-scale       2.4.1. The current South Africa         manufacturers. It has done so             R41.8 billion (20%) of total
                                            renewable energy market has           utility-scale renewable energy          because of the growth potential,          investment attracted into SA.
                                            grown significantly over the last     market size                             localisation requirements, the            Some of the main contributing
                                            seven years since the first project                                           programme’s transparency, and             countries are Germany, France,

                                            came online.                                                                  strong government support.                Italy, Spain, and the USA.
2.4.2. The economic value of              R4 billion more in financial benefits      2.4.3. Investments made to date      R41.8 billion) investments. The
renewable energy facilities               than their cost. As projects                                                    programme has been successful
                                          from more recent rounds of the             Total investments made in the        not only in attracting investments
A Council for Scientific and              programme come online, the                 programme (debt and equity) over     but also in attracting them from a
Industrial Research (CSIR) study          installed capacity and financial           the procured bidding windows,        wide variety of investment sources
(CSIR 2015) demonstrates that             benefits realised will continue to         excluding the expedited round,       (see Figure 5.).
between January and June 2015,            increase as these projects offer           totalled more than R209.7 billion
REIPPPP projects with some 800            much lower tariffs and costs than          as of June 2020 (IPP Office). This
MWp and 1 GWp of wind and solar           their predecessors (see Table 5).          is split between domestic (80%,
PV respectively, generated up to                                                     R167.9 billion) and foreign (20%,

Table 5: Tariffs offered by solar PV, wind, and CSP projects over bid windows [R/kWh]

  Programmes                                                       Large IPP                                                         Small-scale IPP

 Rounds           Round 1          Round 2              Round 3          Round 3.5           Round 4 a, b    Expedited       S1               S2
 (AVG R/kWh)

 Wind             1.51             1.19                 0.87             –                   0.75            0.62            1.15             –

 Solar PV         3.65             2.18                 1.17             –                   0.91            0.62            1.22             1.01

 Concentrated     3.55             3.32                 1.93             1.8                 –                –              –                –

                                                                                                                                                               UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
 solar power

 Landfill gas     –                –                    1.11             –                   –                –              –                –

 Small hydro      –                1.36                 –                –                   1.24             –              –                –

 Biomass          –                –                    1.65             –                   1.61             –              1.65             –

Figure 5: Countries from which private investments in the REIPPPP were made (GreenCape, IPPO 2020)

                                                                         USA                  5 617                          547

                                                        Great Britain + Europe               5 167                                      18 546

                                                Asia (China, Japan, Singapore)                        8 014
                                                                  Middle East
                                                                                                                            1 812
                                                          (Saudi Arabia, India
                                                                                           1 377

                                                                        Africa                                               265

                                                                                 –                        5 000         10 000             15 000   20 000           25 000

                                                                                     DEBT (R MILLIONS)            EQUITY (R MILLIONS)

                                            Allocations of generation
                                            capacity: Table 6 presents final
                                            capacities per round, including

                                            the small IPP programme. As the
                                            table shows, wind and solar PV
                                            are the dominant technologies
                                            in terms of actual capacity
                                            procured. Future rounds of the
                                            programme will have to adjust
                                            their allocated technology
                                            because of favourable bid

                                            prices as well as high (over-)
                                            subscription rates.
                                                                                                                                                             Hopefield Wind Farm,
                                                                                                                                                                   Western Cape.
Table 6: Actual procured generation capacities per REIPPPP bid window9 (IPPO, June 2020)

      Programmes                                                          Large-scale IPP                                                                   Small-scale IPP

    Rounds                 Round 1                 Round 2                Round 3                Round 3.5               Round 4 a,b            S1                   S2

    Wind                   649                     559                    787                    0                       1 363                  9                    0

    Solar PV               627                     417                    435                    0                       813                    30                   50

    Concentrated           150                     50                     200                    200                     0                      0                    0
    solar power

    Landfill gas           0                       0                      13                     0                       0                      0                    0

    Small hydro            0                       14                     0                      0                       5                      0                    0

    Biomass                0                       0                      17                     0                       25                     10                   0

In the large-scale REIPPPP, 91                   pending a determination by the                                                                  2006 (ERA) allows the Minister of
of the 92 projects have reached                  Minister of Mineral Resources and                         The South African                     Mineral Resources and Energy, in
financial close. There is one BW3                Energy based on the IRP 2019.                            utility scale market                   consultation with NERSA, to make
project that has not reached                                                                                    2020-2030                        Ministerial Determinations for
financial close. The remaining BW                2.4.4. The integrated                                                                           new generation capacity if they

                                                                                                                                                                                         UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
3.5 project that reached financial               resource plan                                             The 2019 Integrated                   believe that it is required to secure
close by the end of July 2019 has                                                                        Resource Plan provides                  continued, uninterrupted supply
not commenced construction. One                  The Integrated Resource Plan                         direction on how South Africa              of electricity. The Ministerial
BW 4 project started operations                  (IRP) is a national government                        plans to meet its electricity             Determinations may also outline
in the second quarter of 2020,                   document that aims to provide a                     demand over the next 10 years.              the type of energy sources
bringing the total to four (out of 26)           clear indication of South Africa’s                    This can give an investor a               from which electricity must be
BW 4 projects that have reached                  electricity demand, how this                        good indication of the potential            generated. These decisions are
financial close. The small-scale                 demand will be supplied, and at                      market that will exist and that            based on the most up-to-date
programme and associated future                  what cost. Section 34(1)(a) of the                          can be accessed.                    Integrated Resource Plan.
bid windows are currently on hold,               Electricity Regulation Act 4 of

    Determinations were made for 6 bid windows – 1, 2, 3, 3a, 4 and the expedited round. Energy has only been procured from 4 bid windows – 1, 2, 3 and 4

In May 2011, the then Department     and demand scenarios in South        Under the Eskom build                Key assumptions that changed
                                            of Energy (DoE) – now the DMRE–      Africa. Since the promulgation       programme, the following capacity    include the electricity demand
                                            released the Integrated Resource     of IRP 2010–2030, the following      has been commissioned: 1 332 MW      projection (decreased by 0.6%
                                            Plan 2010-2030 (IRP 2010) in         capacity developments have           of Ingula pumped storage, 1 588      since 2010), Eskom’s existing plant
                                            respect of South Africa’s forecast   taken place:                         MW of coal (Medupi), 800 MW of       performance (ranging between
                                            energy demand for the 20 years                                            coal (Kusile) and 100 MW of wind     68% and 72% in 2020), and new
                                            from 2010 to 2030. The IRP 2010      As indicated in the preceding        (Sere Wind Farm). In total, 18 000   technology costs. Since 2010,
                                            was intended to be a ‘living plan’   section, a total of 6 422 MW under   MW of new generation capacity        there have been several draft
                                            that would be reviewed by key        the REIPPPP has been procured,       has been committed                   revisions of the IRP that have been
                                            stakeholders at least every two      with 4 276 MW operational and        to. Besides capacity additions,      distributed for public comment as
                                            years. However, this was never       made available to the grid. Also,    several assumptions have             tabulated in Table 7 on page 28.
                                            done and resulted in an energy       IPPs have commissioned 1 005 MW      changed since the promulgation
                                            mix that failed to adequately meet   from two open cycle gas turbine      of IRP 2010–2030.
                                            the constantly changing supply       (OCGT) peaking plants.

                                                                                                                                                                   Wind turbine base construction
                                                                                                                                                                    at Perdekraal East Windfarm.
                                                                                                                                                                   ©Mainstream Renewable Power
Table 7: Summary of the developments and revisions of South Africa’s IRP from 2010 – 2019, as well as key planning assumptions (Wright & Calitz, 2020).

                               IRP 2010 – 2030                 IRP Update 2013                 Draft IRP 2016             Draft IRP 2018              IRP 2019 (Gazetted
                             (Promulgated 2011)               (Not promulgated)             (Public consultation)          (August 2018)                October 2019)
                             Target: 2010 – 2030              Target: 2013 – 2050            Target: 2016 – 2050        Target: 2016 – 2030           Target: 2018 – 2030

 Expected energy mix       Scenario-based Big: Coal,       Decision trees; Big: Coal,     Scenario-based Big: Coal    Scenario-based Big: Coal,    Scenario-based; Big: Coal,
                           nuclear Medium: VRE, gas        nuclear Medium: VRE, gas,      Medium: Nuclear, Gas, VRE   VRE Medium: Gas Small:       VRE Medium: Gas, DG/EG
                           Small: Imports (hydro)          CSP Small: Imports (hydro,     Small: Imports (hydro),     Nuclear, DG/EG imports       Small: Nuclear, Imports
                                                           coal), others                  others                      (hydro), others              (hydro), Storage, others

 Demand                    454 TWh (2030)                  409 TWh (2030)                 350 TWh (2030)              313 TWh (2030)               307 TWh (2030)
                                                           522 TWh (2050)                 527 TWh (2050)              392 TWh (2050)               382 TWh (2050)

 Emissions (CO2 eq)        Peak only, EM1                  PPD (Moderate)                 PPD (Moderate)              PPD (Moderate)               PPD (Moderate)
                           (275 Mt from 2025)

 Nuclear options           Commit to 9.6 GW                Delay option (2025 – 2035)     No new nuclear pre-2030;    No new nuclear pre-2030;     No new nuclear pre-2030;
                                                                                          1st units (2037)            (pace/scale/affordability)   (pace/scale/affordability)
                                                                                                                      1st units (2036 – 2037)      2.5 GW (≥2030)

 Import options            Coal, hydro/PS, gas (fuel)      Coal, hydro/PS, gas (fuel)     Hydro, gas (fuel)           Hydro, gas (fuel)            Hydro, gas (fuel)

 Coal fleet performance    >85% EAF; 50-year               ~80% EAF;                      72 – 80% EAF; 50-year       72 – 80%; 50-year decom.     67 – 76%; 50-year decom.
                           decommissioning.                Life Expectancy – 10 years     decommissioning.            MES delay (2020/25)          MES delay (2020/25)
                                                                                          MES delay (2020/25)

 New-build coal            1st units forced earlier        Displaced by LifeEx            1st 1.5 GW (2028)           0.5 GW (2023)                0.75 GW (2023)
                           1.0 GW (2014) 6.3 GW (2030)     (10 yrs) 1.0 GW (2025)         4.3 GW (2030)               1.0 GW (2030)                1.5 GW (2030)

                                                                                                                                                                                   UTILITY-SCALE RENEWABLE ENERGY: MIR 2021
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