CSP World

South Africa has unveiled the Request for Proposals (RFP) for the third round of the Renewable Energy Independent Power Producer Procurement Programme (REIPPP) with a new 200 MW allocation for Concentrated Solar Power.

Although it was not planned to include more CSP projects than those already allocated in the first and second round, the Ministry of Energy has finally decided to increase the capacity with 200 MW more, doubling the initial planned allocation for the first three rounds.

First round allocated 150 MW, all of them awarded to a consortium comprising Spain's Abengoa and South Africa's IDC to develop a 100 MW parabolic trough plant, Kaxu Solar One and a 50 MW tower plant, Khi Solar One, both of them available in our CSP World Map.

The remaining 50 MW to be allocated in second round were awarded to a consortium led by Saudi ACWA to develop the Bokpoort parabolic trough plant.

The South African Department of Energy has included a number of changes in this round after lessons learnt from previous rounds. The price offered by the applicants will continue to be main component as it accounts for 70% of total evaluation, the economic development section will be assessed for the remaining 30%. According to Lisa Talt, Executive Chairperson of Transcend, an advisor of many of the projects awarded in round 1 and 2, "these changes that the Department have introduced are there to encourage long term investors who are determined to adopt the spirit and intent behind the Economic Development aspects of the bid, and to weed out those who are not serious about adhering to stringent government requirements in this area".

"One of the important changes in Round 3 has been to insist that Bidders make commitments regarding the actual number of jobs created over the life of the project. This will mean that Bidders, as well as all potential suppliers to projects are going to have to make surethat they are able to account for every job that they commit to", said Talt.

A particular issue for South Africa's market is the Broad-Based Black Economic Empowerment (BEE), and Act whose main objective is to advance economic transformation and enhance the economic participation of black people in the South African economy. This is managed through certificates about the compliance grade of BEE codes of good practice.

Regarding the BEE issue, Lista Talt affirms that "the bid is clear that none of the methods used to enhance black ownership which exist in the Codes of Good Practice, including the use of the modified flow through principle and the exclusion principle can be used. The Department is wanting to quite clearly incentivise sellers to work closely with new BEE investors, particularly those who are broad based and most importantly have a significant amount of local community ownership". "The real game changer for this bid Round is the fact that those companies who make the highest Economic Development Commitments will gain the most points in the bid evaluation phase. Our Public Procurement Department is available to assist Sellers, EPC and other Contractors, and suppliers to these projects in developing compliant responses to Round Three", Talt sid.

The third round includes a total capacity of 1473.1 MW to be allocated for different technologies:

• On-shore Wind – 653.6 MW
• Concentrated Solar Power (CSP) - 200 MW
• Photovoltaic (PV) – 401.3 MW
• Biomass - 60 MW
• Biogas -12.5 MW
• Landfill gas - 25 MW
• Small Hydro -120.7 MW

Key points for third round bids

• The cap for base price of CSP has been set to ZAR650 per MWh
• Separate Bid Response for each Project:
  • Only one PPA in respect of a Project and a Facility (save for Bids in respect of landfill gas, in which a Bidder may submit one Bid Response relating to a Portfolio of Facilities and enter into one PPA covering the whole Portfolio).
  • The DoE has issued revised versions of the draft PPA, Implementation Agreement, Direct Agreement and the Connection Agreements, which are non-negotiable and may not be marked up by the Bidders.
• Bids must be valid for 365 days from relevant Bid Submission Date (which will be 19 August 2013 for the Third Bid Submission date).
• Project structure detailing all project members, equity participants, Lenders, Contractors, primary equipment suppliers, Black Enterprises, Local Community Members.
• Memorandum of Incorporation (MOI) of the Project Company or draft MOI indicating that the Project Company is a ring-fenced entity must be submitted.
• Fully termed shareholders agreement.
• Heads of terms for all key contractors or equipment suppliers.
• Detailed drafts of annexes to PPA not provided by DoE or responses in respect of annexes to PPA which require responses or input.
• Bidder is required to obtain all environmental and land use consents required for the Project and complete Appendix PA (Environmental and Land Use Consent Returnable):
  • copy of the title deeds evidencing the Project Company's ownership of the Project Site; or
  • copy of notarial lease together with evidence of registration or that it is capable if registration against the title deed of Project Site for term of PPA, together with a copy of the title deed in respect of the Project Site; or
  • an option, lease or sale of land agreement exercisable at the Project Company's instance to acquire the real rights provided for above, together with the relevant title deeds in respect of the Project Site.
• Environmental authorisation, written confirmation of water availability from the Department of Water Affairs (DWA), and consent from the Civil Aviation Authority.
  • DWA will only process Water Use Licences for Preferred Bidders.
• For the purposes of submitting a bid, the Bidder may comprise a Project Company or a consortium.
• The Project Company must be incorporated in South Africa with its sole purpose, object and business of undertaking the Bidders Project and the activities regulated by the Project Documents.
• Any change of the Bid Response is restricted after submission of Bid Response without prior DoE approval.

Key milestones dates for the Third Bid Submission Phase

• 19 July 2013 - important information to be furnished to the DoE including:
  • the technology of the Project;
  • Contracted Capacity of the Project;
  • name and coordinates of the Project Site;
  • whether the Bidder intends to connect to the Transmission System, the Eskom Distribution System, or a Municipal Distribution System.
  • co-ordinates of the substation where the Facility will be connected; and
  • information on the identity of all participants and Advisors to the Project.
• 22 July 2013 – last date for Bidders to submit written questions in terms of Clause 1.1 of Part A of the RFP.
• 19 August 2013 – Third Bid Submission Date.
• 20 August 2013 to 28 October 2013 – evaluation of Bid Responses.
• 29 October 2013 – announcement of Preferred Bidders.
• Within two weeks of appointment as Preferred Bidder – application for budget quotation from Grid Provider, application for the NERSA generation licence and payment of the budget quotation fee.
• 29 October 2013 to 29 July 2014 – Preferred Bidders to finalise their contractual arrangements.
• 30 July 2014 – Financial Close and signing and effective dates of PPAs, Direct Agreements, Implementation Agreements and Connection Agreements.

Economic development

• 40% South African entity participation, Level 5 contributor status minimum for South African Entity Participation and Bidder to comply with the minimum thresholds as indicated in the Economic Development Scorecard (Appendix JB9).
• Shareholder certificates, constituting documents and shareholders' agreements in respect of the Shareholders and the fully developed and agreed shareholders' agreement between the Shareholders of the Project Company , in respect of South African Entity Participation.
• A valid verification certificate by a South African National Accreditation System and/or an Association for BEE verification agency, in relation to Contributor Status Level.

Evaluation Criteria

• Two stage assessment: Compliance with Qualification Criteria and Price and Economic Development:
  • Evaluation criteria: price 70 points.
  • Economic development: 30 points.