City of Cape Town to tender for procurement of 500MW power generation capacity from IPP’s this week

• Cape Town’s biggest power purchase tender – of 500MW – will be issued for competitive proposals this week on 6 April 2023. 

‘We are confident that Cape Town will be the first metro to break free from the suffocating hold that Eskom has placed on our country, and in doing so enable meaningful economic growth and investment that helps more people into work over time. The City  is on track to offer protection from the first four stages of Eskom’s load-shedding within the next three years. In this way, we are positioning Cape Town as a beacon of hope, showing what can be achieved in South Africa,’ said Cape Town Mayor, Geordin Hill-Lewis.

In line with its energy security commitments, the City is seeking competitive proposals from potential independent power producers to purchase electricity from power generation plants comprising of dispatchable technologies, which may include gas-to-power and battery storage.

Related news: record solar PV installations recorded in Cape Town last month 

These power sources need to generate power for a significant portion of the day to support the City’s load-shedding protection efforts.

Importantly, these dispatchable supply sources need not be located in a City-supply area.

Successful bidders will enter into 10 year Power Purchase Agreements (PPAs) with the City, and the potential is there for multiple bidders to be awarded contracts under this program.

Mayor Hill-Lewis tabled the City’s ‘Building Hope’ Budget, for public comment on 29 March, which contains a R2,3bn end load-shedding plan over three years. This includes R220m to buy power on the open market, R288m for the Power Heroes voluntary energy savings incentive scheme, R1bn to operate Steenbras Hydro Pumped Storage Scheme, R53m in ‘cash for power’ payments for solar power from residents and business, R640m on City-owned solar plants, and R50m in battery storage technology.

Cape Town is moving ahead with other load-shedding protection plans:

Phase 1 of the 200 MW renewable energy from IPPs tender: Contracts for this phase remain on track for final awarding within 2023.

Power Heroes Programme tender: Awarding of contracts for preferred bidders expected in April. This is an initiative to unlock incentives for residents through third parties for voluntary energy savings, which will entail automated remote switching off of power-intensive devices at peak times.

Cash for Power feed-in tariff increased by 10,15% for 2023/24, plus 25c per kWh incentive: Cape Town is the first city in the country to offer households and businesses cash for their excess rooftop solar power.

A Request for Information has been issued asking the market for energy trading solutions, including market operation and underwriting services, energy aggregation services and other services related to energy trading platforms. Read more 

Author: Bryan Groenendaal