Unleashing the Power of Renewable Energy: How IPPs Can Transform Early Childhood Development

In my last post, I advocated the establishment of an independently managed fund to channel private sector (CSI) and donor funding to ECD programmes which are likely to have the greatest impact and are capable of being scaled up rapidly. In this post, I outline another way in which the private sector can make a meaningful contribution to the goal of having every child ready to learn by the time he or she enters school.

One of the requirements for licences to operate under the government’s Renewable Energy Independent Power Producers Procurement Programme (REI4P) is an undertaking by operators (IPPs) to spend not less than 1% of annual revenue on projects to promote the social and economic development (SED) of the communities within a 50km radius of their power plants. Another requirement is for IPPs to contribute to enterprise development (ED) over the 20-year operational life of their renewable energy projects. To date, IPPs have actually committed 2% of their revenues to SED (double the requirement) and 0,6% of their revenues to ED.

In 2022/3, the total SED spend was R800 million, with more than 60% of this spent on education (including ECD) and social welfare projects. The IPP Office estimates that the projects commissioned in the first four bid windows of the REI4P will generate R22,8 bn for SED projects over the next 12 years. And the anticipated contribution to ED over the same period is another R7.2 bn. And as more REI4P plants are commissioned over the next 4 years, the amounts available for SED projects and ED will grow significantly. The IPP Office’s most recent report indicates that more than R1 bn in SED and ED funding will be available next year. These are impressive numbers.

Unfortunately, very few IPPs have well-designed SED programmes and many do not bother to evaluate the impact of their projects. And every indication so far is that little effort is made by IPPs to collaborate with one another to ensure that their SED and ED projects achieve maximum impact. On the contrary, it does seem that most IPPs use their SED and ED budgets to support ad hoc initiatives of limited ambition rather than programmes which will meaningfully impact the long-term welfare of their local communities. This is a lost opportunity. There are more than 80 IPPs. If each of them P devoted a substantial portion of its SED and ED budgets to well-designed ECD programmes, they could ensure that every child in their local communities has access to quality early learning opportunities.

And with the support of the IPP Office, it might just be possible for IPPs to allocate a portion of their SED and ED budgets to the independently managed ECD fund described in my last post.