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Eskom unlocks land in power stations for renewable energy

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South Africa’s renewable energy industry has welcomed Eskom’s move to unlock land in power stations for renewable energy development.

This, after the power utility announced that to facilitate investments in further electricity generation capacity infrastructure, Eskom has initiated an auction process to unlock and make some of the land in its power stations available to private investors for renewable electricity generation.

The availability of Eskom-owned land to near-ready projects will remove a significant barrier to investment, and go a long way to resolving the well documented power crisis in the country, which is faced with an urgent and critical need for additional generation capacity, says the state-owned company (SOC).

It notes that the land will be available for lease in a competitive bidding process, initially in Mpumalanga province, 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, says Eskom.

Relieving power constraints

“The bidding criteria will favour generators for size and speed of delivery – thus quickest delivery of the most megawatts to the grid in order to help relieve the constraints on the power system,” says Eskom group chief executive, André de Ruyter.

“The leasing of land would have to be made subject to production being achieved by a contracted date,” he adds.

According to the power utility, 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 SOC says lending additional support to the rapid and urgent addition of generating capacity is the amendment to Schedule 2 of the Electricity Regulation Act of 2006, gazetted by the Department of Mineral Resources and Energy in August 2021.

The amendment allows generators to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with the relevant transmission or distribution licence holders.

The amendment also presents Eskom with opportunities to sell or lease its properties close to its existing power stations, with established grid infrastructure, to the private sector, enabling the development of renewable plants up to 100MW, in support of president Cyril Ramaphosa’s call for “an ambitious, bold and urgent response to the energy crisis”, says the company.

“As Eskom retires its aged coal-fired generation plants, this presents an opportunity to transition towards cleaner sources of electricity generation whilst benefitting from the continued use of the existing transmission and distribution line infrastructure. This allows Eskom to utilise the significant portfolio of land it owns across the Mpumalanga province to facilitate the creation of additional generation capacity at minimal cost while removing a significant barrier to investment for the private sector,” says De Ruyter.

Eskom group chief executive, André de Ruyter.
Eskom group chief executive, André de Ruyter.

Welcome move

Responding to the announcement, the South Africa Wind Energy Association (SAWEA) says this will remove significant barriers and increase the country’s energy availability factor, as it will drive the production of much-needed new clean power in a corner of the country that has always been home to coal.

SAWEA points out that Eskom has stated that the land will be available for lease in a competitive bidding process, initially in the Mpumalanga province, 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.

“This move to deploy renewable power in Mpumalanga, will play a key role in South Africa’s just energy transition as this province will become a priority area for green investment, thereby increasing South Africa’s clean energy portfolio and allowing for higher levels of renewable power penetration,” says Mercia Grimbeek, chair of SAWEA.

The association explains that renewable energy independent power producers, will now have the opportunity to work alongside the systems operator to get more green electrons on the grid, relatively quickly as the maximum amount of electricity generation capacity per project will be capped at 100MW, thereby negating the need for additional licensing.

Another industry body the South African Photovoltaic Industry Association (SAPVIA) also applauded the announcement.

Niveshen Govender, SAPVIA COO, says: “This auction is the type of bold action we have been calling for if we are to address the current energy crisis and ensure South Africa benefits from a sustainable and secure energy mix.

“SAPVIA is heartened by the proactive steps Eskom is taking to address the ongoing energy crisis. We need a step change in how we deliver increased capacity to the grid and through this process we will be able to encourage private sector investment and participation in the energy sector and increase capacity rapidly.

“This is an incredibly positive step forward for the industry and will allow the sector to capitalise on the licensing threshold increase for distributed generation to 100MW. To make the most of this opportunity, we need the current framework for wheeling power across the network to be updated as a matter of urgency. This will enable investment in capacity, relieve the pressure on Eskom and help address the ongoing blight of load-shedding.”

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