SOUTH AFRICA’S RENEWABLE ENERGY INDEPENDENT POWER PRODUCER PROGRAMME (REI4P) 2014 REVIEW REPORT:

WHO WE ARE EGI has partners in 11 countries around the globe and is coordinated by the World Resources Institute. EGI-SA contact: South African EGI Active organisations: Project 90 by 2030 ( – host of EGI-SA for 2014). AIDC ConsumerFair GeaSphere One Million Climate Jobs Campaign Supporting organisations: GroundWork SAFCEI WWF-SA Cullinan & Associates Greenpeace-South Africa

EGI-SA Electricity Governance Initiative of South Africa EGI-SA is a collaborative partnership between a number of civil society organisations, which draws on the global expertise and experience of the international EGI project, and is also more informally associated with other civil society organisations. The aim of EGI-SA is to build a roadmap towards a positive electricity future for South Africa, by: Producing expert analyses and research to inform decision- making processes, Building the capacity of civil society to engage in these processes, Advocating for transparent, inclusive governance that results in legitimate decisions that uphold public interests.

40 diverse stakeholders were interviewed in three sites from: De Aar in Northern Cape, Saldanha in the Western Cape and Jeffrey’s Bay, St Francis Bay, Humansdorp in the Eastern Cape. Among others, stakeholders included: NGOs, local government, trade unions, community groups, ward committees, RE project community trustees and management staff, local councillors, sports associations, reporters, police and the Department of Labour

Renewable Energy Independent Power Producer Procurement Programme (REI4P) The goal of REI4P is to deliver 3,725MW of renewable energy by 2016, and to contribute towards social-economic and environmentally sustainable growth. These proposals (bids) are evaluated in three phases, according to specific criteria. To date there have been 3 complete rounds (bidding windows) with a total of 64 approved RE projects out of 216 bids submitted so far

Description of economic development requirements with respect to local communities (Tait 2013) ElementRequirementsDescription Shareholding by local community 2.5% – 5% of project shareholding The defined local community will have an ownership share in the project company. There are no explicit requirements on how these contributions should be spent, but would probably need to be developmental in nature. Employment 12% - 20% of South African employees This requirement requires that a percentage of the South African employees in the project should come from the local community. Enterprise development0 – 0.6% of project revenue Enterprise development refers to contributions to black-owned businesses with the specific objective of assisting or accelerating the development, sustainability and ultimate financial and operational independence of that enterprise. Socio-economic development 1 – 1.5% of project revenueThese contributions should be directed towards activities that facilitate sustainable access to the economy for beneficiaries. These contributions can go towards a wide range of activities including rural development, the environment, infrastructure, enterprises, reconstruction of underdeveloped areas, development programmes for women or youth, education, health care as well as arts and culture and sports.

Findings Increase of renewable energy uptake 2.Government capacity to manage the REI4P 3.The role of local government 4.Who decides on local benefits for communities? 5.Creating new decent jobs for locals – how local is a local job?

Increase of renewable energy uptake and the revised integrated electricity plan Electricity needed by 2030

Analysis of REI4P MW allocation and remaining (DoE November 2013) Technology MW capacity allocated in First Bid window MW capacity allocated in Second Bid window MW capacity allocated in Third Bid window MW capacity remaining Solar photovoltaic Wind Concentrated solar Small Hydro (<-40MW) Landfill gas Biomass Biogas Total

The composition of the Evaluation team for the REI4P (DoE 2012, DoE 2013).

Location of the renewable energy projects to date

Envisaged timetable for REI4P Original RFP date (DoE 2011) actual RFP date (DoE 2013) Megawatts (DoE 2013) Number of bids accepted out of the number of bids received Window 14 November (28 agreements) 28 out of 53 Window 225 November March (19 agreements)19 out of 70 Window 314 May November (17 agreements) 17 out of 93 Window 429 October May 2014 open with 18 August to close Window 513 May 2013-

Government capacity to manage the REI4P

The human capacity allocation to the different DoE branches (DoE budget vote 2014). DoE branches (number of staff) 2014/15 Energy Policy and Planning PetroleumElectrificationNuclear EnergyClean energy IEP (3) Energy Plan (oil) (23) Hydrocarbons (20) Policy (RE, Coal Map, ISMO) (8) Compliance (4) Licensing (33) Fuel pricing (5) Regional office (61) INEP (20) Energy Reg. office (19) Elec infrastructure, include REI4P (7 + 4 contract staff) Upliftment (6) Nuclear (25) Renewable Energy (5) Carbon Capture Storage, Climate Change (8) Public Entities and other agencies SANEDI (51) Central Energy Fund – CEF (2202) SA nuclear energy corporation/ NECSA (2247) National Energy Regulator SA – NERSA (180) National Nuclear Regulator (97)

Budget allocation (R m’s) to the different DoE branches (DoE budget vote 2014). Administration Energy policy and planning Petroleum regulation Electrification and energy Nuclear Energy Clean Energy year 2014/ / / % of clean energy budget goes to CCS and Fracking

Community Engagement Consistent failure across the study area to engage with communities transparently Failure to set up meaningful institutions that can allow local communities to participate in their own local economic development planning. Existing local economic planning frameworks such as the IDP are not participative Risk of ad hoc development plans for specific geographic areas Corruption and poor labour practices

Community Engagement Community trusts benefit elite Ad hoc non transparent benefits increase community conflicts International case studies provide empowering experience Inter-sectoral lessons can be drawn on – eg mining sector Weak and ineffectual engagement, potentially exacerbating existing community conflicts within already marginalised communities

Access to information REI4P tender documents on a website Registration and R to access Socio-economic development plans not available at local government level

Summary of the jobs created over the three windows for Solar pv, wind and solar CSP (adapted from Eberhard 2014) TechnologyBid Window 1Bid Window 2Bid Window 3 Local construction jobs Local operations jobs Total province Jobs during construction Jobs during operations period (one job = 12 person- months) Eastern Cape Free State Gauteng6240 Kwazulu-Natal96240 Limpopo Northern Cape Western Cape TOTAL Summary of the window 3 jobs per province (DoE 2013) Jobs measured in job years – 20 job years is 1 person employed for 20 years

Local Jobs? Few local contractors benefited International firms scam criteria (technical local) South African but not within 50km radius Limited skills transfer Social ills due to influx of workers? Sufficient demand to drive manufacturing?

Recommendations Lift the “cap” on renewables Increase staff and budget to reflect increasing renewables proportion of energy mix Review REI4P design to address unintended negative community impacts Localisation evaluation needed and promotion of skills transfer Include specialist community development practioners in REI4P formal process Review of Community Trust system is needed DoE to promote meaningful communication and public access to information Monitoring and Evaluation system that includes community and parliamentary oversight All tiers of government and civil society stakeholders need to engage in order to enable best practice

Take home message Renewable Energy capacity in South Africa must be expanded beyond the REI4P. Within the REI4P, the intention to create additional social benefits are applauded. However, the bidding process and the design of REI4P are flawed and have resulted in some unintended consequences that need to be addressed urgently.

THANK YOU