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De-risking solar auctions in sub-Saharan Africa – A comparison of site selection strategies in South Africa and Zambia

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  • Kruger, Wikus
  • Stritzke, Susann
  • Trotter, Philipp A.

Abstract

While auctions are becoming increasingly popular for tendering renewable energy projects to private developers in Africa, their specific project risk implications are not yet fully understood. This paper identifies project risks arising from two types of auction schemes. It compares an approach where the government pre-selects the sites for future renewable energy plants in Zambia's Scaling Solar initiative to one where project developers choose, secure and conduct due diligence on their sites before bidding in South Africa's Africa's Renewable Energy Independent Power Producers Procurement Programme (REI4P). Semi-structured interviews with developers who have participated in both schemes reveal notably different risk profiles. Despite contrary intentions, site-specific risks have been perceived as the highest overall project risk in the government-led site selection process in Zambia. Specifically, site-specific risks were driven by several severe technical issues such as geotechnical, grid connection and solar irradiation uncertainties. In contrast, in South Africa's developer-led site selection process, site-specific risks have been reported to be important, but less pronounced, and more evenly distributed among technical, economic, legal, permitting and social risk factors. This paper recommends an auction design which minimises project risks for all stakeholders. Where governments pre-select sites, closely consulting the private sector is advisable prior to bidding to identify and mitigate technical and other site-specific risks.

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  • Kruger, Wikus & Stritzke, Susann & Trotter, Philipp A., 2019. "De-risking solar auctions in sub-Saharan Africa – A comparison of site selection strategies in South Africa and Zambia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 104(C), pages 429-438.
    • Handle: RePEc:eee:rensus:v:104:y:2019:i:c:p:429-438
    DOI: 10.1016/j.rser.2019.01.041
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    2. del Río, Pablo & Kiefer, Christoph P., 2023. "Academic research on renewable electricity auctions: Taking stock and looking forward," Energy Policy, Elsevier, vol. 173(C).
    3. Bose, A.S. & Sarkar, S., 2019. "India's e-reverse auctions (2017–2018) for allocating renewable energy capacity: An evaluation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 762-774.
    4. Rediske, Graciele & Siluk, Julio Cezar M. & Michels, Leandro & Rigo, Paula D. & Rosa, Carmen B. & Cugler, Gilberto, 2020. "Multi-criteria decision-making model for assessment of large photovoltaic farms in Brazil," Energy, Elsevier, vol. 197(C).
    5. Đukan, Mak & Kitzing, Lena, 2021. "The impact of auctions on financing conditions and cost of capital for wind energy projects," Energy Policy, Elsevier, vol. 152(C).
    6. Helena Martín & Sergio Coronas & Àlex Alonso & Jordi de la Hoz & José Matas, 2020. "Renewable Energy Auction Prices: Near Subsidy-Free?," Energies, MDPI, vol. 13(13), pages 1-21, July.
    7. Kubiat Umoh & Mark Lemon, 2020. "Drivers for and Barriers to the Take up of Floating Offshore Wind Technology: A Comparison of Scotland and South Africa," Energies, MDPI, vol. 13(21), pages 1-21, October.
    8. Stritzke, Susann & Trotter, Philipp A. & Twesigye, Peter, 2021. "Towards responsive energy governance: Lessons from a holistic analysis of energy access in Uganda and Zambia," Energy Policy, Elsevier, vol. 148(PA).

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