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Bruce Linke Finance and Projects 30 April 2012

Overview of the South African Renewable Energy Independent Power Producer Programme (IPP Program) . Bruce Linke Finance and Projects 30 April 2012. Context: energy in South Africa. Energy crisis 2008 Frequent and widespread blackouts = affect output in mining and other key industries

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Bruce Linke Finance and Projects 30 April 2012

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  1. Overview of the South African Renewable Energy Independent Power Producer Programme (IPP Program) Bruce LinkeFinance and Projects 30 April 2012

  2. Context: energy in South Africa • Energy crisis 2008 • Frequent and widespread blackouts = affect output in mining and other key industries • Recognised as significant constraint on development and investment • Further prioritisation of renewable energy development in the Integrated Resource Plan 2010 to reflect the White Paper on Renewable Energy 2003

  3. Shift to nuclear and renewable energy under Integrated Resource Plan 2010 65%

  4. New Capacity under the Integrated Resource Plan 2010

  5. IPP Program: Policy context • Initial SA renewables policy (March 2009): Renewable Energy Feed-In Tariff • Government to purchase output from qualifying renewable energy generators at pre-determined prices • Changed policy (Jul 2011): IPP Program • Competitive bid process based on price competition to drive value for money • Bidders bid the price which will be payable by the Buyer pursuant to the PPA between the Buyer and the Project Company of a Preferred Bidder • Price bid should not exceed the cap allocated for each technology in the RFP

  6. IPP Program:Not to exceed prices

  7. IPP Program:Project Contractual Framework

  8. IPP Program

  9. IPP Program: Overview of new capacity

  10. IPP Program:Overview of Phases • Bids close: • 25 Nov 2011 • Bids announced: 7 Dec 2011 • Financial close: • 19 June 2012 Bids close: 5 March 2012 Bids announced: 14 May 2012 Financial close: 13 Dec 2012 • Bids close: • 20 Aug 2012 • Bids announced: TBA • Financial close: • 13 Dec 2012 • Bids close: • 4 March 2013 • Bids announced: TBA • Financial close: • TBA • Bids close: • 13 Aug 2013 • Bids announced: TBA • Financial close: • TBA

  11. IPP Program:Phase 1 • 53 bids were evaluated by the DoE • 28 bids, representing a total of 1,416MW were selected as preferred bidders • Key evaluation criteria: • 70% price • 30% meeting economic development criteria (localisation)

  12. IPP Program:Phase 1 • 18 Solar PV projects, totaling 631.54MW- 43.6% of the total planned allocation of 1,450MW for solar PV. • 2 Solar CSP projects, totaling 150MW of total allocation of 200MW, representing 75% of the total available capacity of 200MW for solar CSP. • 8 Wind projects were selected, totaling 633.99MW, representing 34.3% of the total available capacity of 1,850MW. • A total of 2,209MW remains to be allocated in the remaining phases to all technologies to make up the total allocation of 3,625MW earmarked for the RE IPP process.

  13. IPP Program:Capacity and technology by Phases

  14. IPP Program:Phase 1 – 28 Preferred Bidders • Solar • Wind

  15. IPP Program: Challenges • Ambitious procurement and construction deadlines • Project financing - Lenders taking risk across a number of Projects • Conservative approach to risk in new technologies • Physical constraints – grid access and capacity • Environmental and planning approvals to be in place prior to financial close • Offshore expertise to deliver projects

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