South Africa’s renewable energy procurement: a new frontier?

Despite a continuing electricity crisis from its coal-fired sources, in recent years South Africa has become one of the leading destinations for renewable energy investment. This is thanks to the launch of its renewable energy independent power producers’ programme for which an estimated $14 billion/R168 billion has been committed thus far and approximately 4 GW of utility-scale renewable energy capacity approved. The programme is unique in that it in order for projects to qualify, developers must commit to undertake requirements for community ownership and economic development benefits in a country with gross socio-economic inequality. As the industry facilitated by RE IPPPP continues to develop, however, concerns have arisen including: the extent to which financial returns will leave or benefit the country; that the ownership of the industry is rapidly becoming the domain of large international utilities; and emerging tensions between ‘bankability’ required by banks and investors and the economic benefits and community ownership criteria.