Power utility Eskom has issued a request for proposal (RFP) for leasing parcels of its land in Mpumalanga province to independent power producers (IPPs) for the addition of new renewable generation capacity.
The state-owned company (SOC) says the move is aimed at encouraging and enabling investments in renewable energy generation infrastructure and give impetus to collaborative efforts to resolve South Africa’s electricity crisis.
Eskom notes the commercial process is based on auctioning suitable land at or near power stations for the development of renewable electricity generation sites, with the evaluation process favouring quick delivery of additional generation capacity to the system.
“This initiative is intended to allow investors accelerated access to our existing grid, and to enable investment in renewable energy next to our coal-fired power stations, to demonstrate our commitment to be part of the just energy transition,” says André de Ruyter, chief executive of Eskom.
According to the power utility, the maximum amount of electricity generation capacity per project will be capped at 100MW to make use of the recently promulgated upper limit for embedded and own generation, and the lease will be for a minimum period of 20 years.
Eskom will provide connection up to the nearest network connection point. In terms of the scheme, the land will remain the property of Eskom for the duration of the lease.
The SOC says schedule two of the Electricity Regulation Act of 2006, as gazetted by the Department of Mineral Resources and Energy in August 2021, permits independent power generators to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with the relevant transmission or distribution licence-holders.
“Investors will be able to enter into bilateral agreements with customers, on terms that they agree, while Eskom will provide the transmission infrastructure to evacuate the electricity. This arrangement is a precursor of the electricity market that is enabled by the legally separated transmission company,” De Ruyter says.
The amendments also afford Eskom opportunities to lease properties close to its existing power stations, with established grid infrastructure, to the private sector, enabling the development of renewable plants up to 100MW.
Eskom notes it is estimated this programme could add further generation capacity estimated at up to 4 000MW to the national grid over the next few years.
It says the key objective for the leasing of land initiative is to provide relief to the constrained electricity system in as short a time as possible.
Among these is the need to bring relief to the system by adding as many megawatts as possible in the shortest possible time, thus increasing the ability to do maintenance, reducing load-shedding and the usage of open cycle gas turbines, the company says.
“Eskom wishes to make innovative and progressive market offerings – and demonstrate its willingness to work with private industry to solve a key country challenge,” De Ruyter adds.
The closing date for submission of proposals is 29 April.
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