OneWorld was contracted to update and summarise South Africa’s progress on and experience of the Renewable Energy Independent Power Producer Procurement Programme (REI4P) in the context of the electricity sector in the country. The report will constitute one of five Country Case Studies across sub-Saharan Africa in contribution to research conducted for the Energy and Economic Growth (EEG) Programme, implemented by Oxford Policy Management.
The Applied Research EEG Programme produces research on the links between energy and economic growth, working closely with policy makers to build more sustainable, efficient, reliable and equitable energy systems. Renewable energy auctions have been identified as an effective and efficient way of increasing private sector investment in electricity generation by tapping into Sub-Saharan Africa’s abundant river systems, bioenergy, sunshine and wind resources. Running effective auctions requires good planning, procurement and contracting capacity, and can involve significant transaction costs. While these are important to consider, a well-designed and implemented programme can effectively mitigate risks, and costs can be easily offset by the benefits of lower tariffs. However, many African countries have struggled to successfully address the risks and costs involved, resulting in poor outcomes.
The purpose of the South African case study report is to distil the country’s experiences with renewable energy auctions through the implementation of the REI4P and identify key lessons for other countries in auction design. It also aims to improve the understanding of renewable energy auction design choices, de-risking mechanisms, implementation modalities and associated outcomes. OneWorld’s work includes desktop review aimed at obtaining the most recent information and data on South Africa’s REI4P and analysing this in view of identifying good practices and key lessons.