Eskom has concluded agreements with four independent power producers for the commercial lease and use of land at its Majuba and Tutuka power stations in Mpumalanga.
This is the first batch of lease agreements Eskom has signed with private companies to develop renewable power projects on land around its power stations.
The successful bidders are HDF Energy SA, Red Rocket SA, Sola Group and Mainstream Renewable Power Developments SA.
These companies are expected to invest about R40bn to develop this “first tranche” of private renewable energy projects on Eskom-owned land, said Eskom CEO André de Ruyter at the lease signing ceremony in Johannesburg on Friday.
“These investments will take place in Mpumalanga, in the heart of coal country, and will be adjacent to existing coal-fired power stations. [The projects are part of] putting together an energy mix for South Africa that is sensible and will create jobs by generating clean energy in Mpumalanga.”
These projects differ from the renewable energy independent power producer (IPP) bid window process run by the department of mineral resources & energy’s IPP office because they do not require Eskom to sign power purchase agreements with the companies building the renewable plants.
“Because Eskom is not the buyer of electricity [for these projects] there is no requirement for Treasury guarantees to underpin these agreements; therefore they present no risk or burden for the South African taxpayers.”
“This [type of project] has been enabled by the announcement by President Cyril Ramaphosa earlier this year that the previous 100MW licensing cap on new [privately-owned] generation projects will be lifted completely,” De Ruyter said.
Power generated by the developers is expected to be connected to the grid within 24-36 months from financial closure.
The state-owned utility owns about 36,000ha in the province and this first round of bidding made available several parcels of land amounting to about 6,000ha.
The four investors will lease 6,184ha for 25-30 years each and contribute at least 2,000MW to the national electricity grid.
Eskom will issue new tenders for land every quarter to enable and accelerate investment in renewable generation capacity.
The companies are given access on a “use it or lose it” basis, said De Ruyter, adding that if they fail to reach certain development goals within a three-year period the land will be taken back by Eskom.
The winning bidders will do comprehensive feasibility studies to determine which technologies or what mix of solar, wind and battery storage they will implement at each site. The exact generation capacity will be known only once the studies have been completed.
“The bidders will sell the electricity on a bilateral basis to customers that will sign power purchase agreements with the developers. The electricity will be wheeled across the Eskom grid, generating revenue for Eskom from its existing assets,” Eskom said.
The next phase of land leases will focus on properties around the Kendal and Kusile power stations in Mpumalanga, as well as the retired Ingagane Power Station in Newcastle, KwaZulu-Natal. These parcels will be offered to the market in the coming months.
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