Introduction to REFSO
The Department of Minerals and Energy has established the
Renewable Energy Finance and Subsidy Office (REFSO),
whose mandate includes:
- The management of renewable energy subsidies; and
- Offering advice to developers and other stakeholders on renewable energy finance and subsidies. This includes information on the size of awards, eligibility, procedural requirements, and opportunities for accessing finance from other sources.
Submitting an expression of interest form, the first step in applying for a renewable energy subsidy, can be submitted throughout the year. However, decisions regarding the award of letters of registration (step two) and the subsequent awarding of subsidy contracts (step three) are made by the departmental Renewable Energy Subsidy Governance Committee (SGC) upon receiving applications. The REFSO Secretariat supports the SGC in this process by evaluating applications against pre-defined criteria and making recommendations.
Since the establishment of REFSO, four projects with a total installed capacity of 12.7 MW have been subsidised. Three of these projects are small scale hydro projects. The fourth project is biogas to electricity.
Project developers are encouraged to submit their
expression of interest form [Word, 95KB] and subsequent
subsidy application form [Word, 105KB] as early as possible to:
- Facilitate interaction with the DME;
- Have the subsidy released timeously; and
- Be eligible for support while funds are available.
Overview of the process
A four-stage process is followed in the administration of renewable energy subsidies:
Step 1: Submit an expression of interest form
If you are a project developer you are invited to submit an
expression of interest form so that your project can be registered.
Step 2: Successful applicants receive a letter of registration
Following the submission of an expression of interest, applicants will be pre-qualified against a set of basic criteria. Applicants who meet the criteria will, subject to SGC approval, receive a letter of registration that requires a detailed application once the project development process is mature.
This letter does not represent a financial commitment by the DME. However, it facilitates the process for the project developer. It also provides the DME with an early indication of the establishment of renewable energy projects.
In the process of finalising the project, here is some of the
legislation [ZIP, 10.2MB] that you, as a project developer, must consider.
Step 3: Submit a subsidy contract application form
When your project reaches maturity, that is, when there is an "off-take agreement", a positive environmental impact assessment (EIA) record of decision, and the release of funds by lead financing institutions is imminent, you must submit your
subsidy contract application form [Word, 105KB].
The SGC evaluates each application against a fixed set of criteria before a subsidy contract is awarded.
Subsidy contracts [PDF, 150KB] will be awarded to qualifying projects until all available funds have been used.
Step 4: Monitoring and disbursement
Once conditions stated in the subsidy award contract have been achieved, the monitoring and subsidy disbursement process will commence.
Finance options
There are several international and domestic finance institutions that offer financial assistance to private-sector companies who wish to establish renewable-energy projects. These institutions offer a wide range of products that include short- or long-term finance, export credits, mixed credits and different types of equity or loans. In summary, the different products that various institutions offer are:
- Grants for feasibility studies;
- Short-term finance;
- Long-term finance:
- Export credits and soft loans;
- Equity or loans; and
- Purchase of carbon emission reduction credits.
For more information, see the renewable energy finance options brochure [PDF, 293KB] as well as
Finance from other sources [PDF, 241KB]
Meetings
The Renewable Energy Subsidy Governance Committee (SGC) meets quarterly to discuss progress, challenges and plans of REFSO. The next meeting is scheduled for September 2008.
Project developers are invited to submit their advice or tips to the SGC before the next meeting.
Key documents
Contact us
Telephone: (012) 317 8711
Fax: (012) 317 8793
E-mail:daniel.modise@dme.gov.za
