The encyclopedia · Strategy & Leadership · Strategic decision · 2011–2014
South Africa's REIPPPP bid down solar PV prices 68% in three rounds
South Africa swapped feed-in tariffs for competitive renewable tenders with underwriting and local-content rules — US$14bn invested, solar PV prices down 68%.
South African Department of Energy · IPP Office
the move
In 2009 South Africa explored feed-in tariffs for renewable energy, then rejected them in favor of competitive tenders. The first request for proposals went out in August 2011; by November, 53 bids for 2,128 MW had arrived and 28 preferred bidders were chosen for 1,416 MW with close to US$6 billion of investment.
The program was built to keep learning: rolling rounds, multiple winners, firm financial underwriting for every bid, and scoring that combined price with local content and ownership. Round two tightened competition; round three drew 93 bids for 6,023 MW and selected 17 winners at still lower prices.
By the World Bank's May 2014 review, Rounds 1–3 had committed US$14 billion for 3,922 MW of renewable capacity, average solar PV tariffs had fallen 68 percent and wind 42 percent, and 86 percent of debt was raised inside South Africa — all in less than three years.
why it works
- Competition across rounds let prices fall as learning accumulated.
- Underwriting requirements eliminated low-ball bids that later fail.
- Local-content scoring turned procurement into industrial policy.
- Multiple winners kept participation and credibility high.
what transfers
To buy a new technology at scale, run competitive tenders instead of fixing a price: each round publishes the clearing price, suppliers find the cost floor, and underwriting stops low-ball bids.
what came after
REIPPPP continued through further bid windows and became the benchmark for African renewable procurement, studied from Zambia to Vietnam. It drew criticism over administrative costs and local-content trade-offs, but its price trajectory proved competitive tenders could beat feed-in tariffs.
references
- South Africa's Renewable Energy IPP Procurement Program: Success Factors and Lessons
- Renewable energy auctions in South Africa outshine feed-in tariffs
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