Firms: DLA Piper and DLA Cliffe Dekker Hofmeyer (bidders), Baker & McKenzie (Lenders and sponsors on 13 of the 28 projects selected in the first round of deals under the South African Renewables Initiative)
Deal: Financial close of bids for Phase 1 of South Africa's Renewable Energy Independent Power Producers Procurement Programme
Area: Finance and projects
Key players: DLA Piper's Asia-Pacific team - led by the head of finance & projects in Asia-Pacific, Damian McNair (pictured) worked in close partnership with a team from DLA Cliffe Dekker Hofmeyer, led by director of projects & infrastructure Kieran Whyte. Bakers Johannesburg office also worked on the deals, with further support from lawyers in the firm's London office.
Deal significance: Lawyers from DLA Piper's Asia-Pacific practice in conjunction with DLA Cliffe Dekker Hofmeyer advised 16 of the 28 successful bidders in Phase 1 across a range of renewable technologies including wind, solar photovoltaic (PV), concentrated solar power (CSP) and hydro.
"This was a very large procurement process," said McNair. "28 greenfield project-financed energy projects trying to get to financial close in a short time frame is unprecedented globally.”
"Everyone has been eagerly awaiting the financial close announcement because now there is certainty, and one of the pillars of a successful project is certainty," added Whyte.
Scott Brodsky, co-managing partner of Bakers Johannesburg office, commented: "South Africa has been working towards adding to its power generation capacity while diversifying energy sources for some time now, leading to a complex tender process and the unprecedented legal challenges of signing and closing so many projects simultaneously."
In announcing Phase 1 financial close, the South African Minister of Energy Dipuo Peters reaffirmed the South African government's commitment to the REIPP Programme. According to McNair, a similar commitment is long overdue from the Australian Government.
"The South African government has guaranteed the purchase of 3725 megawatts of renewable energy under the REIPP Programme, providing certainty for both developers and lenders, and has now committed to an expansion of the REIPP Programme with a further 3200 MW of renewable energy across CSP, solar PV, biomass, biogas, landfill gas and hydro between 2017 and 2020. This is truly a world-leading initiative and commitment to renewable energy," he said.
"The Australian Government has no such commitment in place in terms of an expansion of the local renewable energy industry, which makes domestic and international developers and other industry participants understandably sanguine about investing in Australia.
"In the absence of any support from the Government, the Australian renewable energy industry will continue to lag behind that of not only South Africa, but also many other countries that have, or will very soon have, similar arrangements in place."
DLA Piper and DLA Cliffe Dekker Hofmeyer are currently advising preferred bidders on Phase 2 of the REIPP Programme and are under mandate for Phase 3. The mandates are spread amongst acting for developers, lenders and contractors. The developers and sponsors are both South African and international and the lenders are primarily South African financial institutions. Financial close for Phase 2 of the REIPP Programme is expected in March next year.
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