How REIPPP is contributing to South Africa’s switch to renewable energy
What is REIPPP, its successes, and challenges5th Jun 2020
REIPPP is a government-led initiative to promote buy-in from investors for large- and small-scale renewable energy projects. The program was implemented in 2011, and since then has had some success, but still faces many challenges
What is REIPPP?
South Africa has recognised the need to move away from coal-based energy generation since 1998. The first step towards a concrete plan was the Integrated Resource Plan, which set various technology targets up to 2030.
The South African Renewable Energy Independent Power Procurement Programme (REIPPP) is the main mechanism through which the IRP is expected to reach its targets of 7000 MW renewable energy in 2020 and 17,800 MW by 2030.
The REIPPP is a public-private partnership that encourages independent energy producers to submit bids on the development and design of large-scale renewable energy power plants. The plan aims to be sustainable by introducing rolling bidding windows, and has been designed from the ground up to be transparent.
A key feature of the REIPPP is that Eskom isn’t directly involved, and the plan is cost-neutral to Eskom. Any costs incurred through the implementation of REIPPP are covered by the use of the energy generated by REIPPP.
In addition to adding more renewable energy to South Africa’s power grid, REIPPP has several secondary goals, including job creation, social upliftment, and economic transformation.
While the main focus of REIPPP is large-scale energy generation, there is also the potential for residential developments to contribute. The Small Projects IPP Procurement Programme works in much the same way as the REIPPP, but for small scale projects of 1 – 5 MW each. Residential estate developers would do well to look at solar panel rooftop installations as a way to help contribute to South Africa’s growing energy demands.
Has REIPPP made a difference in the amount of renewable energy in South Africa?
Since its launch in 2011, the REIPPP has attracted over R209.4 billion in private-sector investment. This investment has resulted in a reduction of SA’s carbon emissions by 33.2 million tons, and water use by 39.2 million kilolitres. It has created around 38,000 jobs, predominantly in local communities near IPP plants, mainly for women and youth.
In terms of energy generation, REIPPP has also exceeded expectations. The programme has procured approximately 6,500 MW of renewable energy. Due to fierce competition between bid windows, the price of renewable energy has fallen significantly. In fact, solar and wind energy is cheaper than that provided by Eskom, according to the South African Photovoltaic Industry Association.
One of the biggest success stories emerging from the REIPPP is the Bokpoort Concentrated Solar Thermal Project (CSP) near Groblershoop in the Northern Cape. Bokpoort was expected to generate enough renewable electricity to power 21,000 homes using novel thermal technology to keep producing power even in the absence of sunlight. In the first month of commercial operation, the plant supplied continuous energy for 161 hours, a new African record.
Challenges facing renewable energy generation in South Africa
Despite considerable interest and investment, the REIPPP has yet to transform the current energy landscape in South Africa. One major challenge, according to Bryan Groenendaal, solar and wind farm developer and founder of Green Building Africa, is mismanagement, which has resulted in the fifth round of bidding being delayed for almost four years. The ongoing delay has knock-on effects, as solar and wind projects pile up, and make the next several bidding rounds highly competitive for new entrants.
Another significant challenge facing independent power producers is Eskom’s unbundling. First announced in 2019, the move would unbundle energy generation, transmission, and distribution. New IPPs would need to sign power purchase agreements with the transmission unit before they could start operations. The unbundling and establishment of three new companies can take several years to complete, which can significantly delay renewable energy production.
Delays and lack of clarity regarding the next bidding window, as well as confusion about the state and future of Eskom, have significantly decreased investor confidence in REIPPP. The advent of the COVID-19 pandemic has also thrown a spanner in the works, as Eskom used the governmental lockdown to serve force majeure notices to 22 wind farms, removing 1,980 MW off the grid.
One additional concern is the lack of real community empowerment from REIPPP projects. The current process of involving local communities in renewable energy projects is fragmented at best, which results in vulnerable communities being pushed out by powerful stakeholders. Lack of oversight has resulted in non-profit organisations failing to establish the required community trust for local residents near project sites, as evidenced by problems facing two solar parks in the Limpopo province.
The future of renewable energy generation in South Africa is currently uncertain. While Eskom plans to refit aging coal power plants into gas, solar, and wind plants, it’s clear that the energy provider can’t solve the problem alone.
REIPPP is a promising strategy for generating a lot of power in a minimal amount of time. However, despite some success, the programme faces significant challenges that need to be addressed sooner rather than later.