Johannesburg - Eskom finally partnered with independent power producers in a bid to address the energy crisis in SA. It signed land lease agreements with five independent clean power generators at two of its power stations in Mpumalanga for the construction of new clean energy generation capacity.
The investors will lease 6 184 hectares of land for a period of between 25 and 30 years each, and contribute about 2 000 MW to the national electricity grid. The embattled power utility also plans to make more land available around its power stations where there is sufficient grid capacity to connect clean energy producers.
The successful bidders are HDF Energy South Africa, Red Rocket SA Pty Limited, Sola Group (Pty) Ltd and South Africa Mainstream Renewable Power Developments (Pty) Ltd and have concluded power purchase agreements with third parties, and the power will be wheeled through Eskom’s infrastructure, helping to alleviate the generation capacity constraints.
In a statement, Eskom said the key objective of this initiative is to provide relief to the constrained electricity system in as short a time as possible. There is a dire need to alleviate pressure on the system by adding as many megawatts as possible in the shortest possible time, thus increasing Eskom’s ability to conduct maintenance at its existing fleet, reducing load shedding and the usage of open cycle gas turbines (OCGTs).
This is the first batch of lease agreements to be signed with private companies. This portion is land parcels around the Majuba and Tutuka power stations. The next phase will focus on properties around the Kendal and Kusile power stations in Mpumalanga, as well as the retired Ingagane Power Station in Newcastle, KwaZulu-Natal.
It is expected that the generators will be connected to the grid within 36 to 48 months from financial closure, subject to environmental and other regulatory approvals. Schedule 2 of the Electricity Regulation Act of 2006 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.
Eskom Group chief executive André de Ruyter said the land parcels were thoroughly screened for useability, taking into account accessibility, areas above underground mines, future mining activities, the conservation of environmentally sensitive areas such as wetlands and heritage sites, and the sloping of the land parcels.
“Eskom’s land leasing programme is a first of its kind and could be used as a case study in the electricity supply industry (ESI) in terms of partnering with private electricity generators to accelerate the connection of additional capacity to the national grid to improve the reliability of supply. South Africa’s Renewable Independent Power Producer Programme (REIPPP) has seen IPPs establishing themselves in areas with the greatest renewable resources, but unfortunately where there is minimal grid capacity to evacuate the power. By making land available close to the power stations, where there is grid capacity, Eskom is redirecting where IPPs can establish their plant to fast-track the time to connect,” added De Ruyter.
The bidders will now do comprehensive feasibility studies to determine which technologies they will be implementing at each site - wind, solar and battery storage. The exact generation capacity will only be known once the studies have been completed. One of the successful bidders, Red Rocket Energy SA’s CEO, Matteo Brambilla said their success in the industry speaks for itself.
“We provide an integrated solution from design, development to energy production, operation and maintenance and asset management. With more than 1 000 MW of projects in operations, under construction and near financial close in South Africa and into Africa. We are excited and geared to support Eskom through adding new generation capacity,” he said.
The landmark deal between Eskom and IPPs also bode well for the use and production of clean energy.
“Red Rocket will develop its project in solar and incorporate a storage component but ultimately the bidders combined are supporting Eskom. While the project is in Mpumalanga communities across South Africa stand to benefit from the initiative with more power ultimately being added to the grid,” Brambilla concluded.
Head of development at Red Rocket Energy, Sharief Harris said they managed to secure two parcels of land from them to initiate this project.
“Feasibility studies commenced with the launch of the Eskom procurement process, this approach allowed us to put in proposals to Eskom that we believed would be acceptable to Eskom and sustainable to the projects. These project sites are more suitable for solar and will also incorporate a storage component. We are hoping to implement a combined 300MW on these sites,” Harris said.