Plato reiterates need for IPPs after 'dire' Eskom load shedding situation
Cape Town - Mayor Dan Plato says the latest round of Eskom load shedding should spark the government to expedite the processes for the procurement of power from independent producers.
He lashed out yesterday against the recent round of load shedding which he said has been “absolutely destructive amid a time of Covid-19”.
In October last year amendments to the electricity regulations were finally gazetted which could pave the way for municipalities to source power independently from Independent Power Producers (IPPs).
The mayor said this process should be expedited because “we cannot go on like this”.
“The City calls on national Government to expedite the processes that will enable the procurement from independent producers to become a reality so that municipalities such as Cape Town can go forth and start breaking the sole reliance on Eskom for power provision. Time is of the essence.
“The City has been preparing for a future where more affordable and cleaner energy can be procured by municipalities,” Plato said.
“The City’s plans include building and procuring its own renewable generation capacity. We implore the Department of Mineral Resources and Energy to provide clarity on the process as soon as possible so that we can move forward with the execution of our plans.”
Plato said the City intends to have a photovoltaic (PV) plant (solar-powered) built on the ground by 2022/3, but with the current Municipal Finance Management Act and Energy Regulation Act regulations it could take up to five years after a Determination is provided to having the first power from an IPP in its grid.
Specialist studies were under way. “We are in discussions with the national IPP office to assist us in developing a framework for a municipal procurement programme for cities.
“We are also procuring the services of a legal firm to establish the contractual terms of the power purchase agreement to ensure its compliance with legislation, national regulatory frameworks and the City’s policy landscape,” Plato said.
“We have done a lot of work and the National Treasury supports our initiatives and also the public and transparent procurement processes we committed to from the start. Tender processes and the successful bids would need to be completed ahead of any potential procurement.
“We are working with the CSIR to develop a City-level Integrated Resource Plan which will provide the optimal mix. The last assessment done by the CSIR for the City indicated the low-cost optimal mix included purchasing as much renewable energy as possible,” he said.
Plato added all renewable energy technologies would be welcomed if they met the criteria. However, they were waiting for clarification on the practical implementation of the new amended regulations.
The City is seeking clarity on:
- The status of own generation. Municipal generation projects are unclear, with the regulations referring only to buying and procurement of electricity and not to own generation.
- Municipalities need to understand how the regulations will be implemented within the context of the current Integrated Resource Plan (IRP) for Electricity, which is fully allocated up to 2024. It is not clear where the allocation for municipal procurement will come from in the IRP and whether the Determinations provided last September will be amended to include municipalities or whether a new Determination will be issued to include municipalities.
- It is not clear what timelines will apply to the processing of municipal applications by the Department of Mineral Resources and Energy, especially the time for review of feasibility studies.
Plato added that in August last year the North Gauteng High Court chose not to rule on the merits of the City of Cape Town’s application, challenging that a Ministerial Determination was necessary before power may be procured from IPPs, as originally stated in Section 34 of the Electricity Regulation Act over its applicability and constitutionality.
“The court ruled that the City and the national department should follow intergovernmental channels to clarify the roles and responsibilities. The City has been trying to gain clarity via the intergovernmental channels.
“We remain committed to the renewed engagement process we started in September and hope to receive the necessary clarification from Minister of Mineral Resources and Energy Gwede Mantashe as soon as possible,” Plato said.
“The City has always maintained that local governments have the constitutional power and obligation to procure renewable energy and this is necessary to move away from the sole reliance on Eskom for energy supply.
“The City already has extensive energy-saving campaigns, making Cape Town one of the most efficient cities in South Africa). It has extensive PV and small-scale embedded generation programmes in place, which are ready to be extended.”
The City is proactively setting up all necessary requirements for such IPP procurement programmes, and all its efforts show that it is ready for the diversification of its energy mix for “cleaner, more affordable and secure energy”.
The City spends about 65% of its income from electricity tariffs to buy bulk energy from Eskom.
Plato said with the cost of renewable energy constantly going down, it held potential for big cities to procure cleaner energy for their customers at potentially lower bulk prices, while also making energy more accessible.
“Another big focus for us is to look at different energy resources to ensure all residents have access to reliable and safe electricity, including low-income households.
“All cities, being the drivers of the economy, have growing informality and we need to look at how we address this with new technology, moving away from the business-as-usual approach and ensuring that we create more energy equality so that all our residents will have access to cleaner, more affordable electricity resources,” Plato said.
“We will keep standing up for residents and businesses whose livelihoods and lives depend on a reliable energy supply.”