South Africa's Renewable Energy Procurement: A New Frontier

In the last three years, carbon-intensive, coal-dependent South Africa has become one of the leading destinations for renewable energy investment. Investment has gone from a few hundred million dollars in 2011 to $5.7 billion in 2012 (UNEP/BNEF 2013:27) of which approximately $1.5 billion was for wind and $4.2 billion for solar.

This investment can be attributed to the unprecedented take off of the country’s Renewable Energy Independent Power Producers’ Programme (RE IPPPP), launched in August 2011.Since then a privately-generated, utility-scale, renewable energy sector is being integrated into an electricity network that has otherwise been dependent on abundant sources of low cost coal and dominated by the monopoly utility Eskom. RE IPPPP emerged in the wake of a supply side crisis that resulted in power outages in 2008, a financial crisis within Eskom, year on year electricity tariff hikes since 2009, and the need to meet national commitments to climate change mitigation pledged in 2009.

While coal is still set to dominate the generation mix, renewable energy generation from wind, solar photovoltaic (PV), concentrated solar power (CSP) and other sources is set to constitute approximately 20 per cent of South Africa’s total installed generation capacity by 2030 (DoE 2011a). With five wind and three solar farms under commercial operation at the time of writing the programme has now completed three bidding rounds, with the fourth scheduled for the end of 2014.