Description: 

A project for support of the first megawatt scale projects in three low-carbon technologies with potential to contribute in gigawatt scale to the country’s energy mix.

Background:

Renewable Energy IPP Procurement Program (REIPPP) was launched by Government of South Africa in 2011, which provides feed-in tariff incentives for the development of RE projects. Under REIPPP, IFC and AfDB have directed CTF SEAP resources to support REIPPP’s efforts to promote Concentrated Solar Power (CSP) technology, which was allocated 600MW of capacity. So far, this support has led to three groundbreaking CSP sub-projects, totaling 250 MW of installed capacity.

The early experience with CSP technology in South Africa, supported by the SEAP, has been positive and further reinforced GoSA’s commitment to CSP development. In a short period of time, the value of CSP technology and its ability to provide reliable base-load power from a RE source has become better understood, elevating GoSA’s interest in further promoting the technology and encouraging CSP developers to improve project economics through technical design modifications.

Objectives and Outputs:

The projects will demonstrate different models for private sector participation in SE with plants constructed for captive consumption by industrial facilities, and plants constructed as IPPs selling to the Single Buyer under REFIT tariffs. This will lead the way for developers, investors and lenders to follow with scaled-up investment.  The Program will also demonstrate initial private sector megawatt scale projects in three technology areas that will improve sector capacities to provide these technologies (equipment supply, engineering, advisors etc.) and prove the technical and economic realities of these technologies in the South African context. CTF funds can be used to help the pilot projects, showcasing their commercial viability and value.

The proposed program will enhance the transformational impact of CTF support to South Africa’s RE sector by advancing a track record of innovative solar technologies and business models for distributed power generation. These first mover projects in Sub-Saharan Africa will demonstrate the potential of solar PV.  Investor risk perception in the medium term will be reduced and similar future projects in the region will proceed with less or no subsidy. The overall market experience in the development of CSP plants using new technologies will be enhanced, which will increase efficiency and reduce cost of energy generation in the long-term.

Moreover, improved designs and more advanced technology in the proposed projects will ultimately help bringing CSP tariffs closer to those of fossil-fuel based power plants. Further IFC/CTF support to the sector will help increase CSP developer’s capacity and experience with new technologies and designs, as well as continue to support financial sector risk appetite in this new sector.

This project summary is drawn from draft project proposals [such as the PAD, PID, SAR, and country investment plan] and may not contain the most up-to-date information.

Project Details
Project Proposal I Proposed Decision
Approved on October 5, 2010 (Approved Decision)
Approved amount(s):
USD 85.0 million