Africa-Press – South-Africa. Eskom has signed lease agreements with four independent power producer investors for the commercial lease and use of land around the Majuba and Tutuka power stations for the construction of clean energy projects.
The investors will lease a total of 6 184 hectares of land for a period of 25 to 30 years each, and contribute an estimated 2 000MW to the national electricity grid.
It is anticipated that this new generation capacity will be connected to the grid within 24 to 36 months from financial closure, subject to environmental, land zoning and other regulatory approvals, the utility said on Friday.
The bidders will now do comprehensive feasibility studies to determine which technologies – wind, solar and battery storage – they will implement at each site. 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.
These lease agreements are the first batch to be signed with private companies after Eskom issued a request for proposal in April, followed by a meticulous selection process.
The successful bidders are: HDF Energy South Africa, Red Rocket SA, Sola Group and Mainstream Renewable Power Developments South Africa.
“Investor appetite for land with grid connection was demonstrated by the fact that the bids were three times oversubscribed, offering a good indication that further land parcels will receive favourable consideration,” Eskom said.
The utility will be issuing new tenders for other parcels of Eskom land every quarter going forward, with a view to enabling and accelerating investment in new renewable generation capacity. The next phase of land will focus on properties around the Kendal and Kusile power stations in Mpumalanga, as well as the retired Ingagane Power Station in KwaZulu-Natal. Eventually, up to 30 000ha can be made available for similar projects, Eskom said.
No National Treasury guarantee will be issued for the power purchase agreements, and there will be no risk to or burden on taxpayers or on Eskom. However, through private investment, new generation capacity will be added on an accelerated basis to alleviate the shortfall.
Eskom said the lease agreements form part of its response to President Cyril Ramaphosa’s call for “an ambitious, bold and urgent response to the energy crisis”.
“By making Eskom land available close to the power stations, where there is sufficient grid capacity, we have taken an innovative step to find the quickest way possible and within our scope of influence to boost the country’s generation capacity,” said Eskom CEO André de Ruyter. “Eskom’s land leasing programme is a first of its kind and can be used as a case study in the electricity supply industry in terms of partnering with private electricity generators to accelerate the connection of additional capacity to the national grid.”
That the land leases will attract an estimated investment of some R40 billion to areas traditionally associated with coal-fired electricity generation makes this “a compelling proof point for the just energy transition to a lower carbon economy”, De Ruyter said.
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