Transcript Slide 1

Republic of South Africa
IPP Procurement Programme
IPPs: An Investor & Community Perspective
Maduna Ngobeni
Department of Energy of South Africa
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Introduction
• In August 2011, the Minister determined that 3725MW of
renewable energy be procured by IPPs in five different
rounds (“Bid Windows”), subsequent to which the DOE
initiated the procurement process.
• In December 2012, in a trio of further determinations, the
Minister determined that a further 3200MW of
renewables generation capacity was to be procured from
IPPs, as well as IPP procurement of coal, gas, hydro and
cogeneration generation capacity under the Baseload
Programme and the Medium Term Risk Mitigation Project.
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Introduction (cont’d)
•
To-date, the Department has:
– Under renewables Bid Window 1, entered into 28 agreements on
5 November 2012 totaling 1416MW generation capacity;
– Under renewables Bid Window 2, entered into 19 agreements on
9 May 2013 totaling 1044MW generation capacity.
• With regards to renewables Bid Window 3:
– Received 93 bids on the 19 August 2013
– Appointed 17 preferred bidders totaling 1456MW generation
capacity
– The Department was pleased to note the competitive pricing
offered in the bids received
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Introduction (cont’d)
Technology
MW capacity determined
MW capacity already
procured
Renewables
6 725
3 916
200
0
Coal
2 500
0
Gas
3 126
0
Hydro
2 609
0
800
0
15 960
3 916
Small Renewables (≤ 5MW)
Cogeneration
Total
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PROCUREMENT
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Procurement Process
Background
Procurement documents*
Request for Proposals
Power Purchase
Agreement
Implementation
Agreement
•Part A: General Requirements and Rules
•Part B: Qualification Criteria
•Part C: Economic Development
•Contract between the IPP and the Seller
•Wind PPA
•Solar PPA
•CSP PPA
•Other technologies etc.
•Contract between the IPP and the Department
•Obligation for IPP to deliver on economic development obligations
•On buyer default – Department to pay the IPP
* Subject to variation across each programme.
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Procurement Process
Background
Request for Proposal (RFP)*
RFP Part C
RFP Part B
Qualification
RFP Part A
• Requirements
• Rules
• Environment
• Land
• Economic Develop
• Finance
• Technical
• Price
• Capacity
Comparative
Evaluation
•Price
•Economic
development
• Job creation
• Local content
•Preferential
procurement
•Enterprise
development
•Socio-economic
development
* Subject to variation across each programme.
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COMPARATIVE EVALUATION
Price
Project cost
Rand/MWh
70 %*
30 %
ED
Job creation
Socio economic
Local content
Bidders with the highest combined price and economic development
scores that fall within the capacity allocation per Bid Window are
awarded preferred bidder status.
* Subject to variation across each programme.
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Contractual Arrangement
• Bidders are
issued
standardised
agreements as
part of the RFP.
PPAs are issued
on a per
technology
basis.
IPP
Eskom
Government
Government Framework
Support Agreement
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STRUCTURE OF AN IPP
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Project Structure
• Majority of bidders in the renewables programme use a project
finance structure.
• Project finance debt is generally more expensive than corporate debt
as the only collateral is the project assets.
• However, a project finance structure shields the equity sponsors from
harm should the project fail.
Renewables Programme
Bid Window 1
Bid Window 2
Bid Window 3
Project Finance Preferred Bidders
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18
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Corporate Finance Preferred Bidders
1
1
6
Average Debt-Equity Split for Project
Finance Preferred Bidders
71:29
75:25
72:28
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Typical Shareholding Structure*
100%
90%
Local Community Trust 5%
RSA Member/DFI 15%
80%
70%
RSA Member
20%
60%
50%
• Smaller South African
players have the
opportunity of teaming up
with large international
players to form a project
company.
40%
30%
Lead
Member 60%
20%
10%
0%
Project Shareholding
* A typical shareholding structure on the renewables programme.
Shareholding structures may be substantially different in other programmes.
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Funding Packages
• The DOE wishes to optimise the involvement of black
people in the IPP projects and ensure that capacity is built
within shareholders which are owned or controlled by
black people or local communities to enable them to
participate in the energy sector. In support of this, the
DBSA may offer a funding package (in the form of a loan)
to eligible candidates.
• The IDC and PIC may also provide loans to South African
shareholders.
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RENEWABLES & SMALL
RENEWABLES
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Focus on ED
• The DOE is committed to furthering economic development in South
Africa as can be seen by the 30% weighting assigned to ED in the
scoring mechanism of the renewables programme. The table below
illustrates some of the criteria on which the ED scoring is based in the
renewables programme:
Criterion
Outcome
Job Creation
A bidder is incentivised to create jobs for South African citizens
with further incentives to hire black citizens, skilled blacks
citizens and citizens from the local community.
Local Content
At least 40% to 45% of the construction cost spend of a project
must be local. This encourages local manufacturing growth.
Socio-economic
development
A project is required to spend at least 1% of gross revenue
earned during operations on socio-economic development.
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Small Renewables Fund
• The DOE, with National Treasury, is looking to set up a
fund to assist small, new developers with financing, as
well as reducing the cost and complexity to bid.
• KfW (German Government development bank) has
offered a 34 million euro loan to contribute to the fund.
• The DOE will seek to involve commercial banks (the DOE
has already received commitment from the commercial
banks to contribute to the fund) and other funders to
create a fund large enough to cater to the market.
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Small Renewables Fund (cont’d)
• The fund may well offer standardised documents and
panels of EPC and O&M contractors and equipment
suppliers (these are the primary participants in an IPP
project); this will assist small new developers to become
involved and will further the Department’s aim of
encouraging local developers.
• This fund will take some time to create which means that
the small renewables programme will need to shift
timelines to move in line with the fund’s creation.
However, this will allow more local developers to
participate which is desirable to the DOE, the greater
Government, the country and local communities.
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RENEWABLES
FACTS & FIGURES
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Total Project Funding per MW
All figures nominal in R’millions/MW
Bid Window 1
Bid Window 2
Bid Window 3
Solar PV
36.6
28.9
18.7
Wind
21.0
19.4
21.6
Concentrated solar power with
storage (min 3 hrs per day)
75.8
89.7
89.7
Technology
Small hydro (≤ 40MW)
44.1
Landfill gas
16.0
Biomass
64.3
Total Jobs Created*
Figures represent totals during construction and operations combined.
Bid Window 1
Bid Window 2
Bid Window 3
Solar PV
8 498
6 079
9 632
Wind
4 271
4 025
11 118
Concentrated solar power with
storage (min 3 hrs per day)
3 265
2 344
4 812
Technology
Small hydro (≤ 40MW)
553
Landfill gas
246
Biomass
336
* One job = 12 person-months
All
Renewables
Locations
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THANK YOU
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