Cape Town signs R8 billion deal to dump Eskom
The City of Cape Town has announced an R8 billion deal to buy solar power from independent power producers over the next 20 years.
According to Cape Town Mayor Geordon Hill-Lewis, the deal will reduce the city’s reliance on Eskom and, importantly, secure more affordable rates for residents.
The city concluded two power purchase agreements worth 70MW, with more to follow in the coming months under a competitive tendering process for up to 200MW, he said.
The 20-year Power Purchase Agreements (PPAs) are with solar plants that will be connected to the city’s grid in Atlantis (30MW from JEMPEC) and Philippi (40MW from Make A Difference LLC).
The city plans to buy up to 700MW of independent power over time.
“Families cannot be expected to absorb endless Eskom price increases forever; that’s why we are working to end reliance on expensive Eskom power to make electricity more affordable for Capetonians,” Hill-Lewis said.
The two agreements are cheaper than Eskom, with the City saving 19% to 21% on power purchases compared to current Eskom rates.
The mayor noted that price increases on the agreements will be linked to the Consumer Price Index (CPI), rather than unpredictable Eskom hikes over the next 20 years.
This is notable in the context of Eskom’s historic double-digit price hikes that have seen electricity tariffs skyrocket by 900% over the past 20 years.
While Eskom has committed to single-digit increases going forward, these are still expected to be at least double CPI.
The utility’s forecast modelling anticipates 6% tariff hikes between 2029 and 2050, though this is subject to change based on various factors.
In the immediate term, Eskom’s direct customers will see tariffs increase by 9% next year, following a 9% increase in 2026.
Hill-Lewis said that price hikes below Eskom rates were written into the agreements.
“A total of R8 billion in power is expected to be procured between the two agreements, which require all of this to be below-Eskom-rates over the full 20 years,” he said.
City leading the way
The city said the agreements will also avoid nearly two million tonnes of carbon emissions, earning the city carbon credits, which can be traded on the open market to generate funds for more infrastructure investment.
It said it has already generated R36 million in carbon credits via municipal waste-to-energy initiatives that reduce gas emissions at landfill sites.
The city said the pioneering deals are part of other measures it is leading with in the country, including the ability for residents to earn cash for power they generate through solar.
Residents and businesses have earned R67 million from selling 150 gigawatt hours of their excess solar power back to the city in exchange for municipal bill credits and cash since June 2024, it said.
The city has also led with wheeling electricity across the city’s grid, having seen over 1,700 megawatt hours of power traded between power producers and consumers since 2024.
It has also completed its first own-built solar and battery energy storage plant in Atlantis, totalling 7MW PV plus 10MWh battery storage, alongside plans for further utility-scale own-built renewable projects and refurbishments of existing plants.
Cape Town was the only city in the country to mitigate load shedding during Eskom’s power outage crisis period, where it claims to have cut about 24% of the rotational blackouts.
This resulted in residents often experiencing load shedding at one or two stages below the nationally announced levels.
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