Eskom to auction off land for private renewable energy projects

Power utility Eskom says it will make some of its land available to private investors for renewable energy generation projects. This is in a bid to boost energy availability and generation capacity for the country.

In presenting its interim results for the six months ended September 2021, Eskom reported a drop in energy availability on its network to 65.27%, down from 67.87% the year prior.

The embattled power utility was forced to implement load shedding several times over the period, cutting 427GWh from the grid. The group was also forced to spend R4.5 billion (up from R2.6 billion) on gas turbines to keep the lights on.

Now, to facilitate investment and further generation capacity, Eskom has initiated an auction process to make some of its land in its power stations available to private investors for renewable energy projects.

This, it said, will remove a significant barrier to investment in such projects. It is targeting near-ready projects in the auction.

“The land will be available for lease in a competitive bidding process, initially in Mpumalanga province, and will be offered to the private sector for purposes of generating electricity from renewable technologies for own consumption or for sale to third parties,” it said.

“Mpumalanga has by far the most coal-fired plants with established transmission and distribution infrastructure.”

The bidding criteria will favour generators for size and speed of delivery – ie the quickest delivery of the most megawatts to the grid, to relieve the current, and well-documented constraints on the power system.

The leasing of the land will also be tied and subject to production conditions, such as achieving goals by a contracted date.

The maximum amount of generation capacity per project will be capped at 100MW, in line with energy amendments announced earlier this year. The lease on the land will be for a minimum of 20 years.

Eskom said its constrained financial situation – which makes access to capital expensive – makes it imperative to consider new ways to add new capacity to the electricity system, including leveraging Eskom assets to incentivise the expedited establishment of generating capacity by independent power producers.

It also provides an opportunity for one of the biggest polluters in the country to target greener projects.

“As Eskom retires its aged coal-fired generation plants, this presents an opportunity to transition to cleaner sources of electricity generation while benefitting from the continued use of the existing infrastructure,” said Eskom CEO, Andre de Ruyter.

“This will also enhance Eskom’s reputation…showing a willingness to work with the private sector to solve a key country challenge.”

Read: Eskom warns it could be forced to take 16,000MW off the grid

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Eskom to auction off land for private renewable energy projects