South Africa: fair tailwinds

For European navigators sailing off the African coast, strong winds around the Cape of Good Hope used to be an ominous prospect. For European investors setting their sights on the African continent, they’ve clearly turned into a source of great hope.

Last October, Ireland’s Mainstream Renewable Power was chosen as the preferred bidder for three of South Africa’s largest wind farm projects, totalling a planned capacity of 360 megawatts (MW). The plants were part of the government’s latest round of renewables tenders, comprising 17 projects of a combined 1.5 gigawatts (GW).

South Africa now ranks among the top 10 nations for renewables investment, punching above both Brazil and France in 2012.

Interest in South Africa began to take off with the launch of the country’s Renewable Energy Independent Power Producer programme (REIPP) in 2012, which was originally designed to 3,725MW of renewable energy but was quickly ramped up by a further 3,200MW to be achieved by 2020.

Perhaps unsurprisingly – given how short a time potential bidders were given to get their heads around the procurement process – “Round 1” of REIPP was rumoured to be in trouble by the end of 2012.

However, it eventually achieved its objectives – giving way to Round 2, by all accounts a more dynamic and competitive process which also saw a seminal transition from a subsidy-based regime to one based on market competition.

A wide number of other sectors within social and economic infrastructure were also opened up to the investment community through South Africa’s National Infrastructure Plan of 2012.