PPC-Energy:
Update on Window 1 RE-IPP
Procurement Programme.
07 June 2012
1
Presentation Content
 Introduction.
 RE-IPP Procurement Process Background.
 Overview of Evaluation Process (bid window 1).
 Sequence of event.
 Evaluation Composition.
 Preferred Bidder Results and MW allocation.
 Financial Evaluation.
 Bid Window 2 progress.
2
Introduction
• The procurement documents were released on the 03 of August 2011
and compulsory bidders conference for the first and second window
on the 14 of September 2011.
• The document provides for procurement of 3725MW in five different
rounds subject to the availability of the MW
•
The Department, under bid window one:
– Received 53 Bids by the 4th of November
– Announced 28 preferred bidders in December 2011
• With regards to bid window two:
– Received 79 bids on the 5th of March 2012
– These bids amount to 3255MW whilst the cap was 1275MW
3
Procurement Process Background
Procurement documents:
Request for Proposals
• Part A: General Requirements and Rules
• Part B: Qualification Criteria
• Part C: Economic Development
Power Purchase
Agreement
• Wind PPA
• Solar PPA
• Small hydro PPA
• CSP PPA…….etc
Implementation
Agreement
• Contract between the IPP and the Department
• Obligation for IPP to deliver on economic development
• In buyer default – Department to pay the IPP
4
Procurement Process Background:
Contractual Arrangement
IPP
Eskom
Government
Government Framework
Support Agreement
5
Procurement Process Background
Request for Proposal (RFP)
RFP Part B
• Requirements
• Rules
RFP Part A
Qualification
• Environment
• Land
• Economic Develop
• Finance
• Technical
• Price
• Capacity
• Price
• Job creation
• Local content
• Preferential
Procurement
• Enterprise Development
• Socio-economic
development
RFP Part C
Comparative
Evaluation
6
PART C EVALUATION
Price
70 %
Project cost
Rand/MW
30 %
Economic Dev
Job creation
Socio -Economic
Local content
Preferential
Procurement
7
OVERVIEW OF EVALUATION PROCESS
(BID WINDOW 1)
8
Sequence of Events: Bid Window 1
Event
Date
Ministerial determination (in consultation with National
Energy Regulator of South Africa)
•
3, 725 MW of new generation capacity required by 2016
Programme launch
•
31 July 2011
DoE issued a Request for Proposals
Procurement uploaded on DoE website
•
03 August 2011
Interested Bidders requested to register on a dedicated
programme site: www.ipp-renewables.co.za
Compulsory Bidders’ Conference
•
•
14 September 2011
Interested Bidders taken through the bidding process
Drew interest from across the globe
Close of 1st Bidding Window
•
•
04 November 2011
Evaluations ensued from 04 to 28 November 2011
Conducted by international and local financial, technical and
legal experts
Announcement of Preferred Bidders
•
•
Q2 of 2011
07 December 2011
28 preferred out of 53
Projects need to reach financial close by June 2012
9
Evaluation Composition
Evaluation team:
•
International reviewers
•
•
•
•
•
Legal evaluation team
•
•
•
•
•
•
Bowman Gilfillan
Edward Nathan Sonneberg
Ledwaba Mazwai
Webber Wentzel
BKS
Technical evaluation team
•
•
Legal review – Linklaters (UK)
Technical review – Blueprint consult
Financial review – cross-moderation
between the two Financial Advisory firms
Governance review – Ernst & Young
Mott Macdonald
Financial evaluation team
•
•
Ernst & Young
PWC
Evaluation Streams:
•
Legal Environment
•
•
Legal Land
•
•
•
•
Contributor status level 5
Compliance with threshold
Financial
•
•
Acceptance of the PPA
Project structure
Economic Development
•
•
•
Land right
Notarial lease registration
Proof of land use application
Legal Commercial
•
•
•
Environmental Authorization
Full and partial price indexation
Technical
•
•
Eligibility
Energy resource
10
Renewable Energy IPP’s: Window 1 Preferred Bidder
Allocation to Preferred
Bidders: Window 1
Solar PV
Solar CSP
Wind
Biomass
Biogas
Landfill gas
Small Hydro
Total MW
MW
631.53
150.00
633.99
0.00
0.00
0.00
0.00
1415.52
Total Capacity - Bids Received
Percentage Preferred Bidders
2127.66
66.5%
Number of Passing Bids
Allocation per
Determination
Still Available
Percentage
MW
Percentage
43.6%
818.47
56.4%
75.0%
50.00
25.0%
34.3%
1216.01
65.7%
0.0%
12.50
100.0%
0.0%
12.50
100.0%
0.0%
25.00
100.0%
0.0%
75.00
100.0%
39.0%
2209.48
61.0%
MW allocation
per
Determination
1450.00
200.00
1850.00
12.50
12.50
25.00
75.00
3625.00
28
11
Contracted Number of Jobs: Window 1 & Window 2
Compared.
Jobs during construction
Jobs during operations
First Round
13 908
874
Second Round
22 590
1 371
12
FINANCIAL EVALUATION
(BID WINDOW 1)
13
Introduction
• Majority of bids to a generally high standard;
• No bidder submitted a fully compliant Part B submission;
• Significant number of “failures” related to non-material
omissions and inconsistencies perhaps reflecting tight
timeframe for bid preparation;
14
Financial Evaluation
Key areas of shortcoming included:
• Letters of support not provided by parent company &/or
funders;
• Rationale and quantum of success fees not fully described;
• Limited information on hedging strategies;
• Incomplete financial accounts for equity participants
• Calculation of partial/fully indexed tariffs not done
comprehensively.
15
Financial evaluation results
Results post-clarification:
Solar PV
Wind
CSP
Hydro
Total
Pass (MW)
682
701
150
0
1533
No. Projects
21
10
2
0
33
Fail (MW)
357
233
0
4
594
No. Projects
16
3
0
1
20
16
Financial Analysis – Tariffs
• Majority of bidders have priced at or just below the
applicable technology price cap;
• Similarly most bidders have shown a strong preference
for a fully indexed tariff;
• This may reflect bidder expectation that Round 1 would
be undersubscribed.
17
Bidding Price Differential: Window 1 & Window 2 Compared.
Technology
2nd Round
Average
1st Round
Average
Difference
Price Cap
Solar Photovoltaic
R 1 993.20
R 2 662.00
-25.1%
R 2 850.00
Onshore Wind
R 1 005.30
R 1 134.00
-11.3%
R 1 050.00
Small Hydro
R 1 030.00
R 1 030.00
0.0%
R 1 030.00
Concentrated Solar
Power
R 2 512.00
R 2 686.00
-6.5%
R 2 850.00
Landfill Gas
R 840.00
R 840.00
18
OVERVIEW OF EVALUATION PROCESS
(BID WINDOW 2)
19
Financial Investment: Bid Window 2
Number of Projects
Net Capacity
(MW)
Total Project Cost
(R' 000 000)
1
50
R 4 483
1
1
14
3
R 237
R 52
10
2
10
619
238
599
R 12 812
R 4 853
R 12 202
6
4
3
4
1
3
23
7
190
145
136
127
9
67
799
221
R 5 382
R 4 558
R 3 139
R 4 559
R 248
R 2 376
R 22 745
R 6 708
2
1
8
10
R 202
R 498
79
3 233
R 85 054
Concentrated Solar Power
Northern Cape
Landfill Gas
Gauteng
KwaZulu Natal
Onshore Wind
Eastern Cape
Northern Cape
Western Cape
Solar Photovoltaic
Eastern Cape
Free State
Gauteng
Limpopo
Mpumalanga
North West
Northern Cape
Western Cape
Small Hydro
Free State
Northern Cape
Grand Total
20
Preferred Bidders
Geographic Distribution
21
Thank You
22