South Africa: Designing Data-supported, Two-stage Tender Processes to Ensure Project Viability and Successful Policy Outcomes

Based on robust analysis of various policy options, the Government of South Africa chose to establish a competitive tender process—rather than a FIT—to support solar deployment (Eberhard et al. 2014). Under this process, bidders are first required to demonstrate their expertise, with the government then choosing preferred bidders to submit full proposals. An installed capacity cap was established for each round, providing transparency and market certainty to developers and ensuring the government’s capacity goals are met but not exceeded. Since policy inception, there have been three bidding processes with costs declining with each subsequent round. In this case, the experience gained from projects undertaken in previous rounds led to reduction of barriers to deployment and associated costs. To support a successful bidding process the government also provided reliable solar irradiation data to inform bids from project developers (Stadelmann et al. 2014b). South Africa’s two-stage tender process incorporated a number of effective design elements to ensure project viability and successful outcomes.