The South African Renewable Energy IPP Procurement Programme: Review, Lessons Learned & Proposals to Reduce Transaction Costs

The South African Renewable Energy Independent Power Producer Procurement Programme (REIPPPPP) is a competitive tender process designed to facilitate private sector investment into grid-connected renewable energy (RE) generation in South Africa. This comprehensive report serves as a handbook of the REIPPPP's design, implementation and outcomes. Part A reviews the programme's procurement design, requirements, and outcomes across Bid Windows 1 to 4. Part B extracts key lessons learned for other developing countries. Part C provides design proposals for reducing transaction costs for participating bidders. As a result of this programme, South Africa achieved more investment via Independent Power Producers (IPPs) in four years than in the rest of Sub-Saharan Africa over the past two decades. Bid tariffs fell sharply and most recently awarded projects are among the lowest priced grid-connected RE projects in the world. Key topics include: competitive tender process design, procurement model comparison (competitive tender vs REFIT), economic development criteria, bid window outcomes, investment and financing structures, job creation, local content, and transaction cost reduction strategies. Authors: Anton Eberhard and Raine Naude, Graduate School of Business, University of Cape Town.