Abstract
M.Phil. (Engineering Management)
The introduction of the Independent Power Producers Procurement Programme (REI4P) in 2011 yielded significant results for South Africa. The REI4P is initiated to procure 17.8 GW of electricity generated from Renewable Energy Sources (RES) over the period 2012-2030. The REI4P had a perception of being expensive from the onset, the average electricity tariff for Renewable Energy (RE) projects is currently 40% cheaper than new coal generation facilities. By the end 2016, a total capacity of 3134 MW has been added to the grid with investment estimated to be $14 billion, thus making South Africa one of the leading destination for RE investment. This has led to the REI4P being acclaimed internationally as a great success.
South Africa’s track record in executing major capital expenditure projects has been found wanting in recent times as both Medupi and Kusile coal based power stations have experienced rising execution costs and construction delays. The REI4P’s future beyond round three is currently unclear for Independent Power Producers (IPPs) as the fourth round of winning projects has not started since November 2014. With the announcement made by the South Africa government that the winning projects will be approved before the end of 2017, the challenges and success of IPPs during the first three bidding rounds of the REI4P are studied in this research. This paper aims to define the current REI4P market condition, recommend solutions in order improve the ability of IPPs to survive and be competitive in the future rounds of projects.
The researcher uses the main sources of data, including primary data and secondary data. Secondary data is first analysed to assess the current situation of the electricity generation from RES in South Africa when compared with the leading and follower countries. Even though secondary data provides invaluable background information, it does not provide all the necessary information required to address aim of the study. Some primary data collection was gathered through questionnaire survey which assisted to fill the information gaps. The best fit method to address the research problem was to follow a quantitative method. This method enabled the researcher to quantify factors that has an influence on the performance of IPPs in South Africa.
According to countries’ gross domestic product, the investment in REI4P is close to parity with the leading economies such as Germany. This has positively influenced South Africa’s installed capacity of both solar PV and...