Eskom will in the new year lease out land in Mpumalanga to power developers who can then take advantage of the province’s grid network capacity to start new renewable energy projects, kickstarting the country’s energy transition.
Speaking ahead of the Eskom interim results presentation Public Enterprises Minister Pravin Gordhan outlined the plan to facilitate investment in further electricity generation capacity infrastructure.
Gordhan pointed out that amendments to the Electricity Act to increase the NERSA licencing threshold for embedded generation projects from 1MW to 100MW has created a great deal of interest in the kinds of investments that can now be made into generation infrastructure. “A crucial issue that does need addressing though is that of grid access and access to the transmission system which could act as a constraint,” he explained.
Eskom will thus make available around 36,000 hectares of unutilised land it owns in Mpumalanga for investors interested in starting renewable energy projects.
Access to the grid is essential
“The advantage of this is investors will have ready access to transmission lines and the grid already in place,” said Gordhan. He said more information should be available by February about what exact land would be available and the process to be followed.
The land will be available for lease through a competitive auction specifically for the private sector to generate electricity from renewable technologies for own consumption or sale to third parties. To support that Eskom would in the new year clarify its wheeling tariff and simplify the regulation process by which companies set up wheeling contracts and new grid connections.
Eskom Group Chief Executive André de Ruyter explained the leasing of the land would have to be made subject to production being achieved by a contracted date. “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,” said de Ruyter.
The maximum amount of electricity capacity project will be capped at 100MW and the lease would be for a minimum time period of 20 years. Eskom will provide the connection up to the nearest network connection point. In terms of this scheme, the land would remain the property of Eskom for the duration of the lease.
Mpumalanga has by far the most coal-fired power plants with a well-established transmission and distribution infrastructure. Gordhan pointed out that South Africa’s successful trip to COP26 in Glasgow unlocked billions of dollars in commitments to helping South Africa achieve a Just Energy Transition. This money could be used to transition Mpumalanga out of the coal-fired power station arena into a greener space.
The first of the country’s power stations that needs decommissioning is Komatipoort power station which could become a showcase for how energy transition plans can become actions.
Responding to the announcement the South African Wind Energy Association (SAWEA) expressed their support for the initiative saying it would remove significant barriers and increase the country’s energy availability factor.
“The 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 generation,” said SAWEA chair Mercia Grimbeek.