The state of the renewable energy independent power producer procurement programme: Where to from here?

This report by Good Governance Africa assesses the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) in South Africa, highlighting its success in attracting investment and reducing tariffs while identifying critical challenges in grid capacity, transaction costs, and the need for local financing solutions to avoid crowding out domestic investors.

• The Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) has significantly impacted South Africa's economy and industry, attracting over R300 billion for infrastructure investment and selecting more than 120 independent power producers as preferred bidders.
• Since its launch in 2011, the REIPPPP has awarded 6,327 MW of capacity to 92 independent power producers, attracting approximately R209.7 billion through 92 approved projects. A primary benefit has been the reduction of tariffs, with solar PV and wind bids proving more cost-effective than Eskom's average tariff and the costs of coal plants built between 2007 and 2008.
• Despite its successes, the REIPPPP has failed to effectively lower transaction costs for bidders, which include all expenses from bid development to the commercial operation date. These costs are heavily influenced by the management and design of the procurement programme, which in turn affects bid tariffs and private sector investment.
• There is a risk that global investment funds may crowd out local financing solutions in South Africa. Local banks and investors may be excluded because they are undercut by concessionary rates or because deals are negotiated at a global level without the participation of South African institutions.
• Government tax incentives are driving private power generation, specifically Section 12B of the Income Tax Act. This allowance, which provides tax deductions for renewable energy assets, was increased from 100% to 125% until 28 February 2025, with no cap on solar installation output.
• Inadequate transmission capacity is a major barrier to integrating renewable technologies into the national grid. To address this, South Africa is upgrading transmission infrastructure and has implemented measures to speed up project approvals, including halving environmental authorization timelines and granting grid connection clearances within six months.
• Eskom is implementing battery energy storage systems (BESS) to manage peak demand and reduce reliance on coal. This includes the Hex battery energy storage system in the Breede Valley of the Western Cape, which is described as Africa's largest battery energy storage project.
• Private equity exit strategies for renewable assets are viable, particularly through acquisitions by large energy companies. Examples include Actis selling Lekela (which operates five South African wind farms) to Infinity Power in March 2023, and Copenhagen Infrastructure Partners acquiring a majority stake in Mulilo Energy Holdings.

APA

Siyobi, B. (2023). The state of the renewable energy independent power producer procurement programme: Where to from here? Good Governance Africa. https://digitalmallblobstorage.blob.core.windows.net/wp-content/2023/12/IR-REIPPPP.pdf

Chicago

Siyobi, Busisipho. The state of the renewable energy independent power producer procurement programme: Where to from here? Good Governance Africa, 2023. https://digitalmallblobstorage.blob.core.windows.net/wp-content/2023/12/IR-REIPPPP.pdf.

Wikipedia

{{cite report |last1=Siyobi |first1=Busisipho |title=The state of the renewable energy independent power producer procurement programme: Where to from here? |publisher=Good Governance Africa |date=8 December 2023 |url=https://digitalmallblobstorage.blob.core.windows.net/wp-content/2023/12/IR-REIPPPP.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{siyobi2023state, author = {Siyobi, Busisipho}, title = {{The state of the renewable energy independent power producer procurement programme: Where to from here?}}, institution = {Good Governance Africa}, year = {2023}, month = dec, url = {https://digitalmallblobstorage.blob.core.windows.net/wp-content/2023/12/IR-REIPPPP.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }