SOUTH Africa’s reform agenda has been given a significant boost as the government announced plans to allow and support more private sector players in the country’s electricity generation.
Eskom has decided to auction 36 000 hectares of land around its ageing coal-fired power plants to independent renewable energy producers, capped at 100MW for a minimum period of 20 years.
This is a move that could unlock billions of rand in new investment and add a potential 2 000MW of electricity to the grid.
The power utility said yesterday, the process to make some of the land in its soon-to-be retired power stations available to private investors had already been initiated.
It said the land in Mpumalanga will be available for lease in a competitive bidding process for purposes of generating electricity from renewable technologies for own consumption or for sale to third parties.
Eskom chief executive André de Ruyter, said the utility would provide connection up to the nearest network connection point, taking the pressure off Eskom’s ageing fleet of coal-burning plants.
“The bidding criteria will favour generators for size and speed of delivery – thus quickest delivery of the most megawatts to the grid in order to help relieve the constraints on the power system,” De Ruyter said.
“This allows Eskom to utilise the significant portfolio of land it owns across the Mpumalanga province to facilitate the creation of additional generation capacity at minimal cost while removing a significant barrier to investment for the private sector.”
This project was lauded by investors as part of growth-enhancing reform strategy to deal with the country’s crippling energy crisis.
The South African Photovoltaic Industry Association (Sapvia) said this auction was the type of “bold action” it had been calling for a long time.
“To make the most of this opportunity, we need the current framework for wheeling power across the network to be updated as a matter of urgency,” said Sapvia chief operations officer Niveshen Govender.
“This will enable investment in capacity, relieve the pressure on Eskom and help address the ongoing blight of load shedding.”
Eskom’s decision was also hailed as one that will remove significant barriers and increase the country’s energy availability factor.
The South African Wind Energy Association chairperson Mercia Grimbeek said the decision would drive the production of much-needed new clean power in a corner of the country that has always been home to coal.
“This move to deploy renewable power in Mpumalanga, will play a key role in South Africa’s Just Energy Transition as this Province will become a priority area for green investment,” she said.
South African banks have already expressed financial support for independent power producers who make use of Eskom’s proposal.
The Minerals Council also welcomed the decision as that would contribute to bridging the large country’s electricity supply deficit, diversify the country’s supply, reduce the sector’s carbon footprint and stabilise costs.
Chief executive Roger Baxter said the mining industry had a pipeline of 3 900MW of potential renewable energy projects worth more than R60 billion.
“We are finally starting to see a break in the log jams that have constrained much-needed investments in renewable energy projects, taking pressure off Eskom and greening our members’ credentials,” Baxter said.
Meanwhile, Eskom reported a R9.2 billion interim profit for the six months ended in September, however, it still expects to incur a R9.1bn loss at the end of the financial year in March 2022.
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