Small Projects IPP Procurement Programme First Stage 2 Bid Submission Phase Preferred Bidders’ Announcement 4 October 2015

Introduction In August 2011, subsequent to the Ministerial determination of the same month providing for procurement of MW of renewables generation capacity from IPPs, the Department of Energy initiated the Renewable Energy IPP Procurement Programme (“REIPPPP”) to procure renewables generation capacity from the private sector In a further Ministerial determination in December 2012, the Minister determined that a further MW of renewables generation capacity was to be procured from IPPs Each determination includes a 100 MW allocation for the procurement of ‘small projects’ (≤ 5 MW) from the following renewable energy sources: –Solar Photovoltaic – Landfill Gas –Wind – Biomass –Small Hydro – Biogas 2

Introduction (cont’d) In August 2015, a third determination was made, providing for procurement of a further MW of renewables generation capacity from IPPs. Out of this, 200 MW was allocated to ‘small projects’, indicating the Department’s commitment to the ‘small projects’ industry The Department has established the Small Projects IPP Procurement Programme, to run alongside, but separately from, the REIPPPP, for the purpose of procuring renewable energy from ‘small projects’ The procurement documents were first released to the market on 21 August 2013 The Small Projects IPP Procurement Programme was designed to follow a two stage evaluation process: –The Stage 1 is effectively a pre-qualification stage, with high level qualification criteria which must be met to obtain a Selected Bidder award which enables the bidder to progress to the Stage 2 process –The Stage 2 process is a complete bid evaluation where qualification criteria must be met before price and economic development criteria are comparatively scored 3

Introduction (cont’d) The Department elected to follow the two stage process in order to mitigate the risk of a large number of inexperienced new developers incurring significant costs in compiling bid responses on projects that may have little or no chance of success To date, there have been two Stage 1 Bid Submission Phases and one Stage 2 Bid Submission Phase: –The First Stage 1 Bid Submission Date was 14 October Selected Bidders were appointed in March 2014; –The Second Stage 1 Bid Submission Date was 26 May Selected Bidders were appointed in February 2015; –The First Stage 2 Bid Submission Date was 3 November bids were received on 3 November These bids amounted to 139 MW whilst the available MW for allocation was 50 MW. 4

Procurement documents Part A: General Requirements, Rules and Provisions Part B: Stage 1 Qualification Criteria Part C: Stage 2 Qualification Criteria Part D: Stage 2 Evaluation Criteria Request for Proposals Contract between the Buyer (Eskom) and the Seller (IPP) Solar Photovoltaic PPA Onshore Wind PPA Biomass PPA Power Purchase Agreement Contract between the IPP and the Department Obligation for IPP to deliver on Economic Development obligations On Buyer default – Department to pay the IPP Implementation Agreement 5 Procurement Process Background To be concluded in respect of all First Stage 2 projects

6 Contractual Arrangement IPPGovernmentEskom Government Support Framework Agreement Implementation Agreement Power Purchase Agreement

Request for Proposal (RFP) Requirements Rules Provisions RFP Part A Environment Land Commercial Economic Development Technical RFP Part B Stage 1 Qualification Environment Land Commercial Economic Development Finance Technical RFP Part C Stage 2 Qualification Price Economic Development Job Creation Local Content Ownership Management Control Preferential Procurement Enterprise Development Socio-Economic Development SME Participation RFP Part D Stage 2 Comparative Evaluation 7 Procurement Process Background

STAGE 2 PART D EVALUATION 8 Balanced Scorecard – ED commitments Fully Indexed Price and Partially Indexed Price (30% of Price indexed to CPI) – Rand/MWh Price 70% ED 30%

OVERVIEW OF EVALUATION PROCESS 9

Evaluation Protocols Evaluation conducted in a ‘closed’ evaluation environment, under strict security conditions Members of the evaluation team are ‘ring-fenced’ within each of their firms Signed declaration of interest by all firms and individuals involved in the evaluation process Reports prepared by each discipline reviewed by independent review teams Overall process reviewed by independent governance review team 10

Legal Environment Environmental Authorisation Legal Land Land rights Notarial lease registration Proof of land use application Legal Commercial Acceptance of the PPA Project structure Economic Development South African entity participation Shareholding by SMEs Contributor status level Compliance with thresholds Financial Full and partial price indexation Financial proposal Technical Eligibility Energy resource Technical proveness Evaluation Composition Evaluation team:Evaluation Streams: 11 First Stage 2 Evaluation Team Webber Wentzel Legal Environment Ledwaba Mazwai Webber Wentzel Land Ledwaba Mazwai Webber Wentzel Commercial Ledwaba Mazwai Webber Wentzel ED Ledwaba Mazwai Financial PwC Technical Mott MacDonald Novadays Governance Team EY Independent Review Team Legal Bowman Gilfillan ED Letsema Financial Pieter van Huyssteen Technical Blueprint Consult

PREFERRED BIDDERS 12

Preferred Bidders Solar Photovoltaic 13 Project Name Contracted Capacity Fully Indexed Price* (ZAR/MWh) Partially Indexed Price* (ZAR/MWh) Portion Indexed ED Score (out of 30) Adams Solar PV Project 5 MWR 981,00R 1 279,8030,0% 16,89 Bellatrix Solar PV Project 5 MWR 1 028,00R 1 345,7730,0% 17,04 Du Plessis Solar PV 4 5 MWR 1 160,00R 1 624,0030,0% 23,57 Heuningspruit PV 1 5 MWR 1 017,00R 1 504,1030,0% 10,37 Steynsrus PV 1 5 MWR 1 017,00R 1 504,1030,0% 10,34 Steynsrus PV 2 5 MWR 1 017,00R 1 504,1030,0% 10,38 TOTAL 30 MW * April 2013 base date

Preferred Bidders Salient Terms Solar Photovoltaic 14 First Stage 2 Price: Fully Indexed (Ave. Rand per MWh) (Base Apr ‘13) R Price: Partially Indexed (30% indexed to CPI) (Ave. Rand per MWh) (Base Apr ‘13) R MW allocation 30 MW Total Project Cost (ZAR Millions)R 678

Preferred Bidders Onshore Wind 15 Project Name Contracted Capacity Fully Indexed Price* (ZAR/MWh) Partially Indexed Price* (ZAR/MWh) Portion Indexed ED Score (out of 30) Hopefield Community Wind Farm 4 MWR 1 000,00R 1 405,8030,0% 9,76 Klawer Wind Farm 5 MWR 950,00R 1 332,4530,0% 15,93 TOTAL9 MW * April 2013 base date

Preferred Bidders Salient Terms Onshore Wind 16 First Stage 2 Price: Fully Indexed (Ave. Rand per MWh) (Base Apr ‘13) R 975 Price: Partially Indexed (30% indexed to CPI) (Ave. Rand per MWh) (Base Apr ‘13) R MW allocation 9 MW Total Project Cost (ZAR Millions)R 315

Preferred Bidders Biomass 17 Project Name Contracted Capacity Fully Indexed Price* (ZAR/MWh) Partially Indexed Price* (ZAR/MWh) Portion Indexed ED Score (out of 30) Busby Renewables 5 MWR 1 400,00R 1 939,5230,0% 11,37 George Small Scale Biomass 5 MWR 1 400,00R 2 025,0030,0% 23,06 TOTAL10 MW * April 2013 base date

Preferred Bidders Salient Terms Biomass 18 First Stage 2 Price: Fully Indexed (Ave. Rand per MWh) (Base Apr ‘13) R Price: Partially Indexed (30% indexed to CPI) (Ave. Rand per MWh) (Base Apr ‘13) R MW allocation 10 MW Total Project Cost (ZAR Millions)R 552

Preferred Bidders Summary 19 Technology No. of Bids MW taken by Preferred Bidders Maximum MW available for allocation for First Stage 2 Solar Photovoltaic630 MW Onshore Wind29 MW10 MW Landfill GasN/A Biomass210 MW BiogasN/A TOTAL1049 MW50 MW

Preferred Bidders Geographic Distribution 20 Province No. of Bids Total Contracted Capacity Eastern Cape-- Free State315 MW Gauteng-- KwaZulu-Natal-- Limpopo-- Mpumalanga15 MW North West-- Northern Cape315 MW Western Cape314 MW

Preferred Bidders Job Creation per Province (1) 21 * 1 job = 12 person-months and 1 person-month = 160 working hours (1) Jobs for RSA Citizens Province Jobs* during Construction Period Jobs* during Operations Period Free State Mpumalanga Northern Cape Western Cape TOTAL

Preferred Bidders Investment per Province 22 * Total Project Cost - aggregate Debt and Equity required to fund the Project ** Total Project Value - defined in the IA, used to calculate Bidders’ Local Content commitments Province Total Project Cost* (ZAR Millions) Total Project Value** (ZAR Millions) Local Content Value (ZAR Millions) Free StateR 333 R 168 MpumalangaR 281R 207R 114 Northern CapeR 345R 284R 186 Western CapeR 586R 461R 266 TOTALR 1 545R 1 285R 734

Preferred Bidders Foreign Investment 23 Total FundingForeign Portion Foreign % of Total Debt and Equity Funding Debt (incl. Mezz. Debt)R EquityR 882R 18512,0% TOTALR 1 545R 18512,0%

Preferred Bidders Economic Development Solar Photovoltaic 24 First Stage 2 MW allocation30 MW Local Content Value (ZAR Millions)R 353 Local Content %57,3% Job Creation: Construction (Citizens)217 Job Creation: Operations (Citizens) 1 346

Preferred Bidders Economic Development Onshore Wind 25 First Stage 2 MW allocation9 MW Local Content Value (ZAR Millions)R 112 Local Content %50,0% Job Creation: Construction (Citizens)48 Job Creation: Operations (Citizens)80

Preferred Bidders Economic Development Biomass 26 First Stage 2 MW allocation10 MW Local Content Value (ZAR Millions)R 268 Local Content %60,3% Job Creation: Construction (Citizens)222 Job Creation: Operations (Citizens)1 057

Analysis of MW awarded and remaining Technology MW capacity awarded in First Stage 2 MW capacity remaining (as per Ministerial determinations to date) Solar Photovoltaic30 MWN/A Onshore Wind9 MWN/A Landfill Gas-N/A Biomass10 MWN/A Biogas-N/A TOTAL49 MW 351 MW 27

THANK YOU 28