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

The report evaluates South Africa's REIPPPP, noting its success in attracting over R300 billion in infrastructure investment and selecting over 120 preferred bidders. However, it identifies critical bottlenecks, including limited grid capacity and high transaction costs for bidders. The author argues that maximizing the programme's potential requires improving programme design, enhancing transmission infrastructure, and developing local financial solutions to prevent global funds from crowding out domestic investors. The report also highlights the role of government tax incentives, such as Section 12B of the Income Tax Act, and the importance of integrating battery energy storage systems (BESS) and gas-to-power to stabilize the energy mix and reduce reliance on coal.

• The Renewable Energy Independent Power Procurement Programme (REIPPPP) has attracted over R300 billion for infrastructure investment and selected more than 120 independent power producers as preferred bidders.
• Since its launch in 2011, the REIPPPP has awarded 6,327 MW of capacity across 92 approved projects, with wind and solar PV bids proving more cost-effective than Eskom's average tariff and the costs of coal plants built between 2007 and 2008.
• A significant challenge for the REIPPPP is that it has not effectively reduced transaction costs for bidders, which include all expenses from bid development to the commercial operation date.
• There is a risk that global investment funds may crowd out local financing solutions, as deals are often struck at a global level without South African institutions involved or are undercut by concessionary rates.
• Government tax incentives under Section 12B of the Income Tax Act, which allows for tax deductions of 125% for renewable energy assets until 28 February 2025, are driving private power generation and fund manager interest.
• Inadequate transmission capacity is a major barrier to integrating renewable energy; consequently, the government is focusing on upgrading infrastructure and has implemented faster approval processes, halving environmental authorization timelines and granting grid connection clearances within six months.
• Battery energy storage systems (BESS), such as Eskom's Hex project in the Western Cape, and the potential development of gas resources like the Luiperd and Brulpadda fields, are viewed as essential for reducing reliance on coal and managing intermittent renewable capacity.

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} }