Small Projects IPP Procurement Programme - PowerPoint Presentation

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 3 725 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 sectorIn a further Ministerial determination in December 2012, the Minister determined that a further 3 200 MW of renewables generation capacity was to be procured from IPPsEach determination includes a 100 MW allocation for the procurement of ‘small projects’ (≤ 5 MW) from the following renewable energy sources:Solar Photovoltaic – Landfill GasWind – BiomassSmall Hydro – Biogas 2

Introduction (cont’d) In August 2015, a third determination was made, providing for procurement of a further 6 300 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 2013The 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 processThe 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 2013. Selected Bidders were appointed in March 2014;The Second Stage 1 Bid Submission Date was 26 May 2014. Selected Bidders were appointed in February 2015;The First Stage 2 Bid Submission Date was 3 November 2014. 29 bids were received on 3 November 2014. These bids amounted to 139 MW whilst the available MW for allocation was 50 MW.4

Procurement documents 5 Procurement Process BackgroundTo be concluded in respect of all First Stage 2 projects

6 Contractual Arrangement Government Support Framework AgreementImplementation AgreementPower Purchase Agreement

Request for Proposal (RFP) 7 Procurement Process Background

STAGE 2 Part D evaluation 8 Balanced Scorecard – ED commitmentsFully Indexed Price and Partially Indexed Price (30% of Price indexed to CPI) – Rand/MWh

Overview of evaluation process 9

Evaluation Protocols Evaluation conducted in a ‘closed’ evaluation environment, under strict security conditionsMembers of the evaluation team are ‘ring-fenced’ within each of their firmsSigned declaration of interest by all firms and individuals involved in the evaluation processReports prepared by each discipline reviewed by independent review teamsOverall process reviewed by independent governance review team10

Legal Environment Environmental Authorisation Legal LandLand rightsNotarial lease registrationProof of land use applicationLegal CommercialAcceptance of the PPAProject structureEconomic DevelopmentSouth African entity participationShareholding by SMEsContributor status levelCompliance with thresholdsFinancialFull and partial price indexation Financial proposal Technical Eligibility Energy resource Technical proveness Evaluation Composition Evaluation team: Evaluation Streams: 11

PREFERRED BIDDERS 12

Preferred Bidders Solar Photovoltaic 13Project NameContracted Capacity Fully Indexed Price* (ZAR/MWh)Partially Indexed Price* (ZAR/MWh) Portion Indexed ED Score (out of 30) Adams Solar PV Project 5 MW R 981,00 R 1 279,80 30,0 % 16,89 Bellatrix Solar PV Project 5 MW R 1 028,00 R 1 345,77 3 0,0 % 17,04 Du Plessis Solar PV 4 5 MW R 1 160 ,00 R 1 624,00 3 0,0 % 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 14First Stage 2Price: Fully Indexed(Ave. Rand per MWh)( Base Apr ‘ 13) R 1 037 Price: Partially Indexed (30% indexed to CPI) (Ave. Rand per MWh ) (Base Apr ‘13) R 1 460 MW allocation 30 MW Total Project Cost (ZAR Millions) R 678

Preferred Bidders Onshore Wind 15Project 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 MW R 1 000 ,00 R 1 405 ,80 30,0% 9,76 Klawer Wind Farm 5 MW R 950,00 R 1 332,45 3 0,0 % 15,93 TOTAL 9 MW * April 2013 base date

Preferred Bidders Salient Terms Onshore Wind 16First Stage 2Price: 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 1 369 MW allocation 9 MW Total Project Cost (ZAR Millions) R 315

Preferred Bidders Biomass 17Project Name Contracted Capacity Fully Indexed Price* (ZAR/MWh)Partially Indexed Price* (ZAR/MWh) Portion Indexed ED Score (out of 30) Busby Renewables 5 MW R 1 400 ,00 R 1 939 ,52 30,0% 11,37 George Small Scale Biomass 5 MW R 1 400 ,00 R 2 025 ,00 3 0,0 % 23,06 TOTAL 10 MW * April 2013 base date

Preferred Bidders Salient Terms Biomass 18First Stage 2Price: Fully Indexed(Ave. Rand per MWh)( Base Apr ‘ 13) R 1 400 Price: Partially Indexed (30% indexed to CPI) (Ave. Rand per MWh ) (Base Apr ‘13) R 1 982 MW allocation 10 MW Total Project Cost (ZAR Millions) R 552

Preferred Bidders Summary 19TechnologyNo. of BidsMW taken by Preferred BiddersMaximum MW available for allocation for First Stage 2Solar Photovoltaic 6 30 MW 30 MW Onshore Wind 2 9 MW 10 MW Landfill Gas N/A N/A N/A Biomass 2 10 MW 10 MW Biogas N/A N/A N/A TOTAL 10 49 MW 50 MW

Preferred Bidders Geographic Distribution 20ProvinceNo. of BidsTotal Contracted CapacityEastern Cape- - Free State 3 15 MW Gauteng - - KwaZulu-Natal - - Limpopo - - Mpumalanga 1 5 MW North West - - Northern Cape 3 15 MW Western Cape 3 14 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 ProvinceJobs* during Construction PeriodJobs* during Operations Period Free State 27 600 Mpumalanga 156 457 Northern Cape 191 745 Western Cape 114 680 TOTAL 488 2 482

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 commitmentsProvinceTotal Project Cost*(ZAR Millions)Total Project Value** ( ZAR Millions) Local Content Value (ZAR Millions) Free State R 333 R 333 R 168 Mpumalanga R 281 R 207 R 114 Northern Cape R 345 R 284 R 186 Western Cape R 586 R 461 R 266 TOTAL R 1 545 R 1 285 R 734

Preferred Bidders Foreign Investment 23 Total FundingForeign PortionForeign % of Total Debt and Equity Funding Debt (incl. Mezz. Debt) R 663 - - Equity R 882 R 185 12,0% TOTAL R 1 545 R 185 12,0%

Preferred Bidders Economic Development Solar Photovoltaic 24 First Stage 2MW 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 2MW 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 2MW 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 2MW capacity remaining(as per Ministerial determinations to date) Solar Photovoltaic 30 MW N/A Onshore Wind 9 MW N/A Landfill Gas - N/A Biomass 10 MW N/A Biogas - N/A TOTAL 49 MW 351 MW 27

THANK YOU 28