RISK MITIGATION IPP PROCUREMENT PROGRAMME

The key principles for the design of the RFP will be based on a least cost and least regret basis taking into consideration the present socio-economic challenges and the importance of affordable electricity and the significance there of for economic growth.

In fostering an environment that will allow for least cost options the Department will introduce the opportunity for a bidder to bid in a portfolio manner with the objective of combining a range of technologies that will meet the system operator demands, but also, through the use of a cost optimal approach, combine technologies to reduce the average bid tariff and ultimately the cost of electricity to the end consumer.

The Project may therefore comprise of any of the following:

• a single Facility using a single technology solution, on a single Project Site;
• multiple Facilities using different technology solutions (i.e. Fuel and non-fuel based generation), on a single Project Site, or
• multiple Facilities using different technology solutions, on multiple Project Sites.

The minimum Contracted Capacity of a Project shall be 50 MW and the maximum Contracted Capacity shall be 450 MW, subject to availability and transmission evacuation capacity at the connection point.

Due to the emergency nature of the RMIPPPP, the objective is to procure energy from projects that are near ready. The timelines from the release of the RFP in the market to bid submission and then again from preferred bidder stage to financial close will be short to ensure that electricity can be connected to the grid as soon as possible. The RMIPPPP will allow for a phased grid connection, incentivising early power with a long stop date for the last permissible commercial operation dates before end June 2022

The connection timelines will not allow for any deep strengthening of the grid and the qualification criteria will therefore facilitate projects where grid capacity is available and do not require any deep grid works.

The RMIPPPP will provide for long term power purchase agreements up to 20 years.

The Economic Development Elements of the RMIPPPP are aligned with the outcome of the REIPPPP Bid Window 4 Value for Money negotiations with further alignment to the amended BBBEE Codes to introduce specific aspects such as supplier development and elements to cater for youth, women and those living with disabilities.

Specific focus is placed on local content with local content now also introduced in the operational phase over the lifespan of a Project.

It is fundamental to the success of the RMIPPPP that the pricing will be the key factor in the process of awarding projects to bidders. In this regard, the Department will align with the 90/10 principles espoused in the PPPFA and Regulations in the price and specific goals (BBBEE/ED) evaluation.

The procurer, in respect of the procurement programme, will be the Department of Mineral Resources and Energy and the electricity must be purchased by Eskom Holdings SOC Limited designated as the buyer.

The Qualification and Evaluation process will be based on the known and internationally recognised two-staged evaluation approach as used in all previous procurement rounds.

• The first stage is a qualification stage that has a number of minimum qualification requirements for the legal, financial, technical and economic development responses. The qualification criteria has been designed to elicit, amongst others, an indication of the readiness of Projects. A project has to pass all of the qualification criteria to advance to the evaluation stage.
• The second evaluation stage is a comparative evaluation of price and economic development (competitive evaluation) using the 90/10 split as per the PPPFA 90/10 price evaluation principles in order to score and rank the Bid Responses.
• The outcome of this stage is a list of preferred bidders.