Overview of the South African Renewable Energy Independent Power Producer Programme (IPP Program) Bruce Linke Finance and Projects 30 April 2012

Context: energy in South Africa  Energy crisis 2008  Frequent and widespread blackouts = affect output in mining and other key industries  Recognised as significant constraint on development and investment  Further prioritisation of renewable energy development in the Integrated Resource Plan 2010 to reflect the White Paper on Renewable Energy 2003

Shift to nuclear and renewable energy under Integrated Resource Plan %

New Capacity under the Integrated Resource Plan 2010

IPP Program: Policy context  Initial SA renewables policy (March 2009): Renewable Energy Feed-In Tariff  Government to purchase output from qualifying renewable energy generators at pre-determined prices  Changed policy (Jul 2011): IPP Program  Competitive bid process based on price competition to drive value for money  Bidders bid the price which will be payable by the Buyer pursuant to the PPA between the Buyer and the Project Company of a Preferred Bidder  Price bid should not exceed the cap allocated for each technology in the RFP

IPP Program: Not to exceed prices TechnologyCommercial Energy Rate (ZAR) Commercial Energy Rate (AUD) Onshore windR 1,150/Mwh$140 Solar PVR 2,850/Mwh$347 Solar CSPR 2,850/Mwh$347 BiomassR 1,070/Mwh$130 BiogasR 800/Mwh$98 Landfill gasR 840/Mwh$102 Small hydroR 1,030/Mwh$126

IPP Program: Project Contractual Framework

IPP Program

IPP Program: Overview of new capacity Technology Proposed amount to be installed Percentage allocation of IPP Program Onshore wind1850MW49.7% Concentrated Solar Power (CSP) 200MW5.3% Solar Photovoltaic (PV)1450MW38.9% Biomass12,5MW0.3% Biogas12,5MW0.3% Landfill gas25MW0.7% Small hydro (<10MW) 75MW2% Small Projects IPP (max 5MW installed capacity) Total threshold of 100MW2.7% Total 3725 MW

IPP Program: Overview of Phases Phase 1 Phase 2 Phase 3 Phase 4 Phrase 5 Bids close: 5 March 2012 Bids announced: 14 May 2012 Financial close: 13 Dec 2012 Bids close: 25 Nov 2011 Bids announced: 7 Dec 2011 Financial close: 19 June 2012 Bids close: 20 Aug 2012 Bids announced: TBA Financial close: 13 Dec 2012 Bids close: 4 March 2013 Bids announced: TBA Financial close: TBA Bids close: 13 Aug 2013 Bids announced: TBA Financial close: TBA

IPP Program: Phase 1  53 bids were evaluated by the DoE  28 bids, representing a total of 1,416MW were selected as preferred bidders  Key evaluation criteria:  70% price  30% meeting economic development criteria (localisation)

IPP Program: Phase 1  18 Solar PV projects, totaling MW- 43.6% of the total planned allocation of 1,450MW for solar PV.  2 Solar CSP projects, totaling 150MW of total allocation of 200MW, representing 75% of the total available capacity of 200MW for solar CSP.  8 Wind projects were selected, totaling MW, representing 34.3% of the total available capacity of 1,850MW.  A total of 2,209MW remains to be allocated in the remaining phases to all technologies to make up the total allocation of 3,625MW earmarked for the RE IPP process.

IPP Program: Capacity and technology by Phases TechnologyMW allocation all Phases MW allocated in Phase 1 Max MW proposed to be allocated in Phase 2 Onshore wind1,850 MW MW MW Solar PV1,450 MW MW MW Solar CSP200 MW150 MW50.00 MW Biomass12.5 MW MW Biogas12.5 MW MW Landfill gas25 MW MW Small hydro75 MW MW Total3,625 MW1, MW1, MW

IPP Program: Phase 1 – 28 Preferred Bidders  Solar  Wind

IPP Program: Challenges  Ambitious procurement and construction deadlines  Project financing - Lenders taking risk across a number of Projects  Conservative approach to risk in new technologies  Physical constraints – grid access and capacity  Environmental and planning approvals to be in place prior to financial close  Offshore expertise to deliver projects