The DoE recently made sweeping amendments to the RFP under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) to make the bid submission process cheaper and less onerous for developers. Will the DoE make the same changes to the RFP under the Small Project Independent Power Producer Procurement Programme (SPIPPPP)?
The intention is to give Small and Medium Enterprises and smaller, emerging developers of renewable energy projects an opportunity to participate in renewable energy generation.
The stated intention of the SPIPPPP is to give Small and Medium Enterprises (SMMEs) and smaller, emerging developers of renewable energy projects an opportunity to participate in renewable energy generation. The SPIPPPP has been structured to reduce the financial burden on small developers. Yet, breaking the process up into two separate bid submission stages before a project is awarded preferred bidder status adds a layer of costs to developers. The DoE has run two successful stage 1 bid submission rounds, the most recent of which was 26 May 2014. A stage 1 bid submission is equivalent to an expression of interest, and developers are not required to comply with too many onerous requirements in order for their projects to be considered. But the greatest challenges smaller developers face is the cost involved in participating in the second stage of the bid submission process.
The second stage of the bid submission process requires small developers to comply with qualification criteria that are essentially identical to those found under previous editions of the RFP under the REIPPPP. This places strain on small developers to keep their projects feasible, because the costs involved in preparing a stage 2 bid submission would be comparable to those faced by larger projects. According to South African Renewable Energy Association chairperson Johan van den Berg, the cost of submitting a bid under the REIPPPP ranges from R2 million to R4 million.
The DoE is investigating different options to assist bidders, including reducing the cost to submit a bid and potentially funding projects at interest rates that would usually be unattainable in the commercial lending market, but the DoE has not released any findings. The DoE could ease the strain on small developers in stage 2 of the SPIPPPP bid submission phase by making similar amendments to the RFP under the SPIPPPP to those recently made under the REIPPPP. The first stage 2 bid submission date is on 1 November 2014 and we hope we will see the DoE amending the bid submission requirements and giving details of the proposed small projects fund well before that date to stimulate increased interest in the small projects programme.