The independent power producer (IPP) process has an explicit speci- fication that communities should be co-owners in any renewables projects in terms of government’s broad-based black economic-empowerment (BBBEE) policy.

Since renewables are a form of distri- buted generation, they can be ideal for these sorts of arrangements. But will they really bring about benefits for local communities or become an exclusive arrangement where only a few people are able to collect the ‘rents’?

Will they sow the seeds of discord? Or is government ‘outsourcing’ develop- ment and the provision of basic needs to private firms that are often ill equipped to do so and may have all the incentive to find the least-cost approach because they are more concerned about keeping their enterprise afloat?

It is too early to tell whether this experi- ment will work. In any case, no IPP deal has been closed yet. What we are sure of is that the IPP approach is a template that has been tested in mining and will be applied to other types of energy sources – most probably fracking as well.

In mining, this ‘outsourcing of development’ model has had a poor record and has led to tragic consequences, like Marikana, where the problem of the absent State (in the form of strong local government) only feeds community dis- possession and disenchantment.

Many of these renewables projects will be developed in poor, rural areas where people are desperate for development of any kind, which presents its own set of challenges: the management of expectations, the balancing of interests and needs and a lack of skills and capacity in the communities.

Outsourcing development on the back of government infrastructure programmes incentivises local authorities to do nothing and only pass the buck.

In the IPP procurement programme for renewables, economic development criteria comprise 30% of the final score for the evaluation of a project. The IPP process itself falls under the State’s public–private partnership (PPP) scheme run by the National Treasury.

A BBBEE scorecard was used, aligning the process with other government tender processes for PPPs. The BBBEE matrix includes the following elements: job creation, local-content thresholds, ownership, management control, preferential procurement, enterprise development (ED) and socioeconomic development (SED).

The programme further refined the elements of ownership, ED and SED by focusing, in particular, on the benefits to be realised by local communities in the vicinity of renewables projects. Local communities are identified as ‘communities in the nearest residential areas of villages to the project site within 50 km from the project site’.

Developers comply if they can demonstrate that share certificates and the shareholders agreement indicate minimum community ownership of 10%.

Preliminary research by WWF-SA and the University of Cape Town’s Energy Research Centre revealed large variances in the level and depth of engagement of developers with the communities that would be the recipients of socioeconomic development endeavours. It is also evident in the way in which community benefit trusts are structured, particularly with reference to clauses ensuring that the project or representatives of the project have the dominant say in the management of the trust with regard, in particular, to how funding should flow and the projects to which the funding should flow.

Renewables project developers have sought to limit their community engage- ment and obligations and treat it as a variation of corporate social responsibility because there is no incentive to do more.

In addition – and this is most ironic – the present approach of PPPs applied to the IPP process is, arguably, inappropriate to effectively extend energy to the poor. Government should assume more responsibility in implementing pro-poor strategies for energy access where the IPP scheme should form a strategic element of a broader local development strategy. One could have the paradoxical situation where the national grid is amply supplied but local residents remain energy poor.

A key issue that warrants further debate is whether the tender documents should stipulate to developers how they should manage their SED and ED contributions – for example, specifying requirements for community consultation and engagement, the level of engagement and how impacts should be monitored and evaluated. If money spent is going to be the only prescribed requirement, arguably, it could be very difficult to ensure accountability and commitment to development outcomes.

Although land has not been spotlighted as a contentious issue between developers and communities, there is no overlaying of targeted sites for the development of these new energy projects against existing land ownership. Further, no research has been undertaken to determine which landowners are most likely to be vulnerable.

It is suggested that such an endeavour will be helpful in ensuring coherent planning for projects and avoiding unnecessary hardships to communities and the huge upfront costs for IPPs.

Asymmetry in terms of information and the signing of strict nondisclosure agreements can fuel conflict if this is not managed carefully because asymmetry tends to fill the air with distrust. Localising benefits to communities remains a key challenge for all energy development projects. The renewables IPPs only demonstrate how laudable attempts to build in local ownership – which, on paper, seems good – can only happen when the State itself is ‘locally present’ and active. It ties IPPs to local develop- ment strategies, and does not leave IPPs to do the job while it does nothing itself.

Otherwise, outsourcing development to the private sector will bear minimum fruit and numerous headaches as the real elephant in the room is still not dealt with. The responsibility and burden of development is that of the State – not private firms.