South Africa is rich in alternative forms of energy. They include solar, biomass, hydro-power, biogas, landfill gas and wind energy. In line with South Africa's commitment to sustainable development, there has been a strong shift in focus from primary energy resources, such as coal and oil, to alternative energy resources.
In August 2011, the South African Government launched its Renewable Energy Independent Power Producers (RE-IPP) Procurement Programme by issuing a Request for Qualifications and Proposals. Prospective participants need to navigate the policy, legal and regulatory framework applicable to the programme. Government's objectives for the programme go beyond electricity generation and include social and economic development and empowerment, with a particular emphasis on local content and job creation.
The key role players in this programme include the Minister of Energy and the Department of Energy who fulfil the role of custodians of energy resources in South Africa. The role of buyer of the electricity generated by independent power producers falls to Eskom, which also acts as National Transmission Company and Distributor. The National Energy Regulator of South Africa acts as licensing authority.
Investors in renewable energy have to comply with procurement legislation as well as company, environmental, land and exchange control legislation.
There have been four procurement rounds in the process thus far. The first involved 28 projects generating 1 415 MW of electricity, the second involved 19 projects generating 1 044 MW of electricity, and the third involved 17 projects generating 1 472 MW of electricity. Seventy-seven bids were submitted in the fourth round and 13 successful projects were announced during April 2015. Following the success of the RE-IPP Procurement Programme, the Government is looking to commence the procurement of power from cogeneration (paper and pulp; sugar bagasse; waste heat), natural gas and coal sources in the coming year.
While the renewable energy industry in South Africa is highly regulated, it offers an array of investment possibilities. A study undertaken by a top US-based research body lauded South Africa as breaking new ground in clean energy development for the entire African continent. The study ranked South Africa as the ninth-leading destination for clean energy investment and the fastest-growing green energy market among the G20 economies.
“The role of buyer of the electricity generated by independent power producers falls to Eskom, which also acts as national transmission company and distributor.”
For a comprehensive document outlining the implications of this area of law in South Africa
click here.
