Eskom to Sign PPA’s with Five Independent Power Producers for Additional Generation Capacity

• Eskom has announced that it will be signing power purchase agreements (PPA’s) with five independent power producers (IPP’s) this Friday at 1 pm.
• Further details will be announced at the signing ceremony.
• These PPP’s fall outside of the country’s renewable energy independent power producer procurement programme (REIPPPP) which is managed by the IPP Office within the Department of Mineral Resources and Energy.

As part of the broad measures to address the country’s ongoing load-shedding crisis due to a lack of generation capacity, South Africa’s state-owned energy utility, Eskom, launched three programmes last month to procure much-needed power for the national grid. The programmes focus on generators capable of supplying more than 1MW to the grid. Over time the threshold will be lowered to enable smaller producers to participate.

The combined impact of the programmes, predicted to exceed 1 000MW, will make an important contribution towards reducing the load-shedding burden on consumers. The aim is to have power feeding into the grid as soon as possible. Link for more information on the three programmes HERE

Along with the load-shedding crisis, the move by Eskom to ‘go it alone’, is seen as a snub to the Department of Mineral Resources and Energy under the leadership of Gwede Mantashe, who has failed to bring any new generation capacity online in the last three years.

Since the Independent Power Procurement Office (IPPO) was seconded to the Central Energy Fund in 2017 and then purged in 2019 to fall under the Department of Mineral Resources (DMRE), the ability of the country to procure new generation capacity has declined dramatically.

Gwede Mantashe was appointed Minister of Mineral and Energy Resources in May 2019. That same year Mantashe was credited for promulgating the country’s Integrated Resource Plan (IRP) which seeks to procure 35348MW of a mix of generation technologies by 2030. The following year he gazetted a Sector 34 determination to procure 11813MW of power by 2022.

Since Mantashe’s appointment, three energy procurement programmes have been implemented namely; the Risk Mitigation Independent Power Producer Programme (RMIPPPP) which seeks to procure 2000MW of new generation capacity (launched in September 2020), and the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Window 5 which seeks to procure 2500MW of new generation wind and solar capacity (launched in April 2021). A third procurement programme, REIPPPP Bid Window 6 which seeks to procure 2600MW of solar and wind capacity, was launched in April this year and the bidders were announced last week – read more

In total, 7100MW is to be procured under the three programmes yet to date only 150MW ( 3 x 50MW projects) has reached financial close and is expected to feed electrons into the grid at the end of Q4 2023. To date, only three of twenty-five projects awarded preferred bidders status in Bid Window 5 have concluded PPA’s but have yet to reach financial close – read more.

South Africa is in a massive energy crisis. Rotational load shedding is getting worse and the cost to the economy is a massive R950 million a day. According to a report presented by the University of Cape Town, 5GW of renewable energy was rolled out before 2021, the country would not be experiencing load-shedding. Read more

Author: Bryan Groenendaal