Organised business has come out in strong support of Eskom’s initiative to lease some of its land in Mpumalanga to large independent power producer projects.
Public enterprises minister Pravin Gordhan announced at a media briefing on Wednesday that Eskom will make part of the 36,000ha it owns in Mpumalanga available to independent power producers who take advantage of the 100MW licensing threshold announced by the government previously. This would give them ready access to the transmission grid. He hopes to have more clarity on this by February.
Gordhan also said Eskom is working urgently to expand its transmission grid — especially in the Eastern Cape and Northern Cape — to accommodate the electricity generated by independent power producers.
Business Unity SA (Busa), Business Leadership SA and the Minerals Council SA have all welcomed the announcement.
“It is exactly this type of partnership between the public and private sector that Busa has been appealing for in the course of the last three to four years,” the organisation said in a statement.
“This initiative demonstrates the optimal utilisation of appropriate public and private sector infrastructure and capacity to address the critical problem of energy supply. This is great for the economy, but also addresses the frustrations of ordinary people who experience load-shedding on a regular basis,” Busa said.
“Busa has consistently called for necessary structural reforms in the economy to attract investment, put us on a sustainable inclusive growth path and address the socioeconomic challenges we have.”
Busa also welcomed what it said was the “fresh and progressive approach” from Eskom noting that its group CEO André de Ruyter had consistently maintained Eskom must facilitate the entry of private sector players into the energy market and enable access to the grid of cleaner forms of energy. It said the announcement demonstrated that Eskom had finally adopted an approach that moved away from a monopolisation of the energy market.
Minerals Council SA said the announcements were welcome steps in much-needed structural reform to kick start the electricity-constrained economy. It noted that its member companies had a pipeline of 3,900MW (3.9GW) of potential renewable energy projects worth more than R60bn that would, when implemented, substantially contribute to bridging the large country electricity supply deficit, diversify the country’s supply, reduce the sector’s carbon footprint and stabilise costs.
“The announcements by minister Gordhan and Eskom management today are great news for not just mining companies but the broader economy. We are finally starting to see a break in the logjams that have constrained much-needed investments in renewable energy projects, taking pressure off Eskom and greening our members’ credentials,” says Minerals Council CEO Roger Baxter.
“A key factor in building renewable energy projects is access to the Eskom transmission grid in a predictable, sustainable and cost-effective manner, allowing for solar and wind projects to be built off mine sites,” he said. Baxter also welcomed Gordhan’s commitment that the government would issue regulations early in 2022 on the cost and structure of wheeling (transmitting third party electricity) tariffs and giving certainty to private electricity generators about the use of Eskom’s grid infrastructure.
In a statement Eskom said the land in its power stations would be made available to private investors with near ready projects for renewable electricity generation.
“The land will be available for lease in a competitive bidding process, initially in Mpumalanga, 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. 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 — thus quickest delivery of the most megawatts to the grid to help relieve the constraints on the power system,” De Ruyter said. “The leasing of land would have to be made subject to production being achieved by a contracted date,” he added.
The maximum amount of electricity generation capacity per project will be capped at 100MW, and the lease will be for a minimum period of 20 years. Eskom will provide connection up to the nearest network connection point. In terms of the scheme, the land will remain the property of Eskom for the duration of the lease. The evaluation process will favour quick delivery of large capacity to the system.
“Eskom’s constrained financial situation, which makes access to capital expensive, makes it imperative to consider innovative ways to add new capacity to the electricity system, including leveraging Eskom ‘assets’ to incentivise the expedited establishment of generation capacity by independent power producers.
“These assets include access to land and proximity to grid connection points, among others,” the statement said. The main objective of the project was to provide relief to the constrained electricity system in as short a time as possible.
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