City Power given green light to enter 20-year-deal with independent power producers

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City of Joburg plans to cut reliance on Eskom by five percent in 2025. File Picture: Picture: Qimono/Pixabay

Published Feb 3, 2024

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The Council of the City of Johannesburg has approved a “groundbreaking” plan to get into a 20-year deal with independent power producers (IPPs) for new generation capacity.

This was revealed by City of Joburg’s member of the mayoral committee (MMC) for Environment Infrastructure Services Department (EISD) Jack Sekwaila.

He said City Power was struggling to continue providing electricity in a sustainable way to the residents, given the country's energy challenges.

"When the government of local unity took over the city, we decried the state of power supply and the impact of load shedding on our residents, and vowed to resolve this once and for all.

“Through this long-term agreement of procuring energy through IPPs, the City, through its entity City Power will be on the right track towards achieving the goal of energy equality, energy independence, energy security, and energy supply," said Sekwaila.

"These fundamental objectives will be realised at a lower price and little interruption as it's currently the case with Eskom."

City of Joburg plans to cut reliance on Eskom by five percent in 2025. File Picture: Pexels

The Joburg MMC said while this was a step in the right direction, there was still a process that must be followed before the city's power utility can enter into any agreement IPPs on a long-term.

The next step would be to seek approvals from the Department of Cooperative Governance, the National Treasury, Department of Minerals Resources, and the National Energy Regulator.

“These approvals will make way for City Power to finally get into a 20-year procurement deal with independent power producers. The nation's energy crisis coupled with the ever-growing demand for electricity supply have hit City Power quite hard and have tampered with its ability to effectively generate adequate revenue, which is essential in delivering the mandate of economic and social development within the city of Joburg,” he said.

Sekwaila said deal would ensure they were lowering reliance on Eskom and it also spoke to the city's climate action plan that was adopted in 2021.

“According to the report that was tabled in the Council this week, the local utility plans to reduce the amount of energy it procures from Eskom by 5% in 2025. In 2030, it plans to drop Eskom reliance from 87 to 66%.

“In 2035, City Power will only be sourcing 59% of electricity from Eskom, and the rest will be coming from independent power producers,” he added.

This would also lead to lower carbon emissions.

City Power board chairperson Bonolo Ramokhele said the “groundbreaking” development comes after they secured 92 MW of power from four IPPs last year.

“All this forms part of City Power's 10-point plan to lessen the impact of load-shedding on our customers, especially businesses which are the cornerstone of economic activity within the city,," said Ramokhele.

Part of City Power's alternatives as contained in its 10-point plan includes solar farms, gas, battery storage, and waste-to-energy, among others.

The City of Joburg has also noted the draft Integrated Resource Plan (IRP) 2023 gazetted in January 2023, and said it will submit its comments and position in due course.

Once the IRP 2023 has completed the public participation process and signed off by the Minister of the Department of Minerals Resources, necessary adjustments would be made on the current City of Joburg’s Energy Plan.

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