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“The Gambia – Grid-Connected Solar PV” on study tour to South Africa to learn best practices in the development, procurement and implementation of Power Purchase Agreements

October 20, 2022
Image: © Mr. Sambou Kinteh (Climate Change Officer at the Ministry of Environment, Climate Change and Natural Resources, The Gambia)

Disclaimer: This news piece was written by the NAMA Support Project (NSP) The Gambia – Investing in Grid-Connected Solar PV.

Following the successful identification of an Independent Power Producer (IPP) through an open tender for the implementation of the 10.5MW solar PV project, the NAMA Support Project “The Gambia – Grid-Connected Solar PV“  Management Unit (PMU) embarked on a study tour to South Africa to learn best practices in the development, procurement and implementation of Power Purchase Agreements (PPAs).

The goal of the study tour was to build the capacity of Gambia National Water & Electric Company (NAWEC) and other relevant institutions affiliated with the PPA negotiations and NSP implementation in general. It was necessary to do the study tour at the initial stages of the PPA negotiations to allow relevant stakeholders, including members of the national negotiation team and the PMU, to gather information on the common challenges concerning PPA negotiations with the private sector. Furthermore, lessons learnt will enable partners to avoid potential oversight of critical contractual details during the PPA negotiations that could be difficult to resolve in future.

The delegation comprised representatives from the following institutions:

  • United Nations Development Programme through the NAMA Project Management Unit
  • Ministry of Petroleum and Energy
  • Ministry of Environment, Climate Change and Natural Resources
  • National Water and Electricity Company
  • Public Utilities Regulatory Authority
  • Gambia Investment and Export Promotion Agency

The study tour was aimed at enhancing capacities in the following areas:

1. Power Purchase Agreement (PPA): Development of PPA document, tender document, connection agreement, land sub-lease agreement, tendering process and, PPA negotiations and implementation challenges.

2. Private Sector Participation: Participation of local and international private sectors and/or consortiums in the electricity procurement process of South Africa through PPAs.

3. Grid stability: Determination of points of connection, impact of connecting directly to the national or regional grid and measures taken to mitigate potential grid instability.

4. Management cycle of solar PPA: Learn from the challenges associated with the end of life-cycle management of the solar PV facilities.

5. Financial: Learn about South Africa’s resource mobilisation efforts or financing of solar projects (source of financial resource/ donor partners, funding requirements, compliance with International Finance Corporation (IFC) standards and sustainability of the projects).

6. Environmental: Understand Environmental and Social Impact Assessment (ESIA) for the solar PV sites, Resettlement Action Plan RAP implementation modalities and impacts of solar PV projects on ground water extraction.

7. Land: Land acquisition processes for the solar PV plants (site selection and geotechnical studies).

8. License: Understand license acquisition process (both environmental and operational) and monitoring measures to ensure compliance

9. Policy alignment: Reconciliation of potential conflicting mandates of relevant sectors to PPA agreements to ensure synergy and effective implementation – including but not limited to investment, environmental and energy policies.

Lessons learnt:

1. International IPPs must include local context to their bid submission by forming a consortium with a local firm to ensure national capacity development and retention in the energy sector.

2. A specialized institution (Industrial Development Cooperation) coordinates all industrialization developments in South Africa including procurement of IPPs in collaboration with a dedicated unit for IPPs/PPAs under the Department of Mineral Resources and Energy.

The NAMA Support Project “The Gambia – Grid Connection Solar PV” will support an IPP to invest in the construction and operation of two solar PV plants in Farafenni and Basse, resulting in 10.5 MW of installed solar capacity. Furthermore, it will support the improvement of the institutional framework to attract private sector investment, specifically through supporting the government to develop the PPA documentation, a Grid Connection Agreement and a Land Sub Lease Agreement.

The NAMA Facility is a joint initiative of the German Federal Ministry for Economic Affairs and Climate Action (BMWK), UK’s Department for Business, Energy and Industrial Strategy (BEIS), the Danish Ministry of Climate, Energy and Utilities (KEFM), the Danish Ministry of Foreign Affairs (MFA), the European Union and the Children’s Investment Fund Foundation (CIFF).