South Africa’s Renewable Energy Independent Power Producers Procurement Programme
(the REI4P) is an extensive initiative to install 17.8 GW of electricity generation capacity from
renewables – wind, solar, biomass, biogas and hydropower – over the period 2012 to 2030.
Although at the outset the REI4P seemed an expensive option, designed only to deflect
criticism of South Africa’s high carbon footprint and excessive dependence on coal-based
electricity generation, the escalating costs of the latter, the rapidly falling costs of
photovoltaic and wind power, and the increasingly competitive bidding process of the REI4P
have changed this prospect. At the conclusion of round three, the weighted cost of energy
has reached a 23% discount to the cost of new coal-based generation and a 28% discount to
global renewable energy prices. The bidders’ commitments to local employment creation
have similarly increased from 11 to 18 jobs/MW. The programme is now well placed to
deliver on a broad range of objectives, including regional development and black economic
empowerment. However, maximum benefit from the REI4P will not be secured without
some revision to aspects of the bidding and procurement process. More specifically, the
local content provisions need to be tightened to drive higher levels of local manufacturing.