Eskom signs new agreements in big step to end load shedding
Eskom announced that it had signed lease agreements with four independent power producers (IPPs) for the commercial lease and use of land owned by the power utility in a bid to add new clean energy capacity to the national grid.
This is the first batch of lease agreements to be signed with private companies. It comprises land parcels around the Majuba and Tutuka power stations in Mpumalanga.
“It is anticipated that the generators will be connected to the grid within 24 to 36 months from financial closure, subject to environmental, land zoning and other regulatory approvals,” Eskom said in a statement.
The successful bidders are:
- HDF Energy South Africa (Pty) Ltd;
- Red Rocket SA (Pty) Ltd;
- Sola Group (Pty) Ltd; and
- Mainstream Renewable Power Developments South Africa (Pty) Ltd.
These four IPPs will lease 6,184 hectares (ha) of land for 25 to 30 years each and contribute an estimated 2,000MW to the national electricity grid.
However, the exact generation capacity will only be known once the companies have conducted and completed studies to determine which technologies they will be implemented at each site – wind, solar and battery storage.
The land parcels chosen in Mpumalanga and other sites were thoroughly screened for useability, considering 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.
The successful IPPs will sell the electricity on a bilateral basis to customers through a purchase agreement with the developers. The electricity will be wheeled across the Eskom grid, generating revenue for Eskom from its existing assets.
“We will be issuing new tenders for other parcels of Eskom land every quarter going forward to enable and accelerate investment in new renewable generation capacity,” said Eskom.
This follows after the power utility noted that IPPs appetite for land with grid connection was demonstrated by the fact that the bids were three times oversubscribed, indicating that further land parcels will receive favourable consideration.
Eskom plans to make more land available around its power stations and other sites with sufficient grid capacity to connect renewable energy producers. Eventually, up to 30 000ha will be made available for similar projects.
“By making Eskom land available close to the power stations, where there is sufficient grid capacity, we have taken a step towards finding the quickest way possible to boost the country’s generation capacity,” said Eskom chief executive André de Ruyter.
“The fact that these land leases will attract an estimated investment of some R40 billion to areas traditionally associated with coal-fired electricity generation makes this a compelling proof point for the just energy transition to a lower carbon economy,” De Ruyter added.
The next phase
The next phase of land will focus on properties around the Kendal and Kusile power stations in Mpumalanga and the retired Ingagane Power Station in Newcastle, KwaZulu-Natal.
These parcels will be offered to the market in the coming months. 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),” said Eskom.
Eskom believes this strategy is the best solution to introduce clean energy sources to the country’s energy mix, consistent with Eskom’s Just Energy Transition (JET) Strategy.
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