23 May 2012
Standard Bank Group funds five winning bids in the second round of government programme
Five projects supported by Standard Bank Group were among the successful bidders in the second round of bidding in the South African government's programme to procure renewable energy.
The winning bids funded by Standard Bank Group include wind and solar projects that will together generate 328 megawatts of power. Standard Bank Group is underwriting up to R6.1bn in debt to support these projects.
Alastair Campbell, Standard Bank Group's head of Mining, Energy and Infrastructure Finance, says: "It is important for Standard Bank to play its role in funding this programme upfront that is so important to the country's long-term energy security, but equally we are encouraged by the appetite in the external investor market to participate in this new asset class."
Government announced earlier that of the 79 bids submitted, 51 were compliant and only 19 bidders had been selected as preferred bidders in the second round. The 19 projects will generate 1 043 megawatts of power.
"As expected, competition among bidders has intensified during this second phase of the procurement process, and as a consequence the tariffs charged by these projects has also come down.
"We anticipate that the competition to provide renewable energy will continue to intensify in future bidding rounds. In addition, we expect that the consolidation among equipment manufacturers of wind and photovoltaic equipment particularly in both Europe and China, will result in bidders being able to offer an even better tariff proposition to government in the third bidding window," says Mr Campbell.
The procurement and evaluation process has itself been important in attracting bids from foreign investors who will provide South Africa with access to state-of-the-art technology.
"The rigour and transparency of the process has been essential to ensuring that all the parties involved in the process are incentivised to compete vigorously on a level playing field. The healthy competition has clearly worked, and we are now seeing a number of winners and losers emerge as the process proceeds."
"There is still considerable interest in the sector and we still expect there to be strong competition in the third procurement round. In addition, we believe that as the local content requirements for bidding window 3 rises, there will be more South African start-ups entering the fray," says Mr Campbell.