We’re joined by Damian McNair, who’s the Head of Finance and Projects for Asia Pacific at DLA Piper.  Damian welcome to BRR Media.

Thanks Kate.

Well Damian South Africa has launched a renewable energy project called the Renewable Energy IPP Procurement Program, as part of their goal to reach a 42% renewable energy target for all new electricity.  Can you tell us a little bit about the project?

Sure it’s a land mark program designed to stimulate the country’s renewable energy sector.  As you said the goal is to generate 42% of all new energy from renewable energy sources over the next 20 years.  Technologies have been mandated by the Department of Energy, onshore wind, concentrated solar thermal, solar PV, biomass, biogas, landfill gas and small hydro.  So in conjunction with DLA in South Africa we’ve advised more than half of the successful bidders in Phase 1 and Phase 2 and we’re also acting for a number of bidders and also lenders in Phase 3 of the Program.

Well Damian it sounds like a major project, has there been any challenges so far and can you see any challenges in the future?

Yeah I think the main challenge is the timetable, particularly for Phase 1 we’ve got all of those attempting to reach financial close by June 30, and then we’ve had Phase 2 where the bids went in, in early March and then financial close for that is the end of the year, and Phase 3 and Phase 4 and so on.  So just try to put bids in and also for the Government to evaluate and then get the financial close in the time frames that are set out is very, very challenging at the moment.

Yeah certainly.  Well Damian we’re seeing renewable energy projects like this one go through in various countries, but they seem to be falling over in Australia, why is this?

That’s a good question.  For the program the South African Government is guaranteeing the purchase of 3,725 megawatts and that’s from renewable energy sources, on specific terms.  So it provides certainty for developers, so that then allows them to obtain the necessary financing and all the lenders they’ve bought into the program, so that’s the main thing that there’s certainty and that’s the issue with Australia at the moment there’s no guaranteed purchase in Australia, it’s a market based mechanism and that is attempting to create economic incentives but there’s issue with that.

Yeah certainly.  Well what would you see then I guess as the crucial changes that need to happen in Australia if we want to get similar projects up and running?

Yeah I’ll give you an example that’s probably a bit more wind focussed.  We need to remove the inconsistent and the restrictive state based planning regulations surrounding the siting and the development of those wind farms.  And to be honest the approach taken by the Victorian and the NSW Governments that restrict the ability to site wind farms in areas with strong wind resources means that the investment is likely to move elsewhere.  So we need a consistent and long term policy framework for measures such as, you know the RET, the RET expires in 2030, so it doesn’t provide long term certainty for financial modelling of the wholesale renewable energy development.

It sounds like an interesting project in South Africa and certainly hope to see that some of these changes do come through so that we can have similar projects up and running in Australia.  Damian thank you so much for joining us today.

Thanks very much Kate.

That was Damian McNair, who heads up the Finance and Projects team for Asia Pacific at DLA Piper.  Listeners if you have any questions for Damian of course send them through using the panel on your screen or otherwise via email to law@brrmedia.com.