Eskom to open vast tracts of land for private power projects

Eskom will make available large tracts of land it owns in Mpumalanga to investors wanting to build private power generation plants, public enterprises minister Pravin Gordhan said on Wednesday.

The state-owned electricity utility has 89 000 acres of land in the province, little of which is being utilised. The idea is to make this land available, on a rental basis, to the private sector to build renewable energy facilities of up to 100MW in capacity, in line with recently amended regulations.

“These investments will have more ready access to transmission lines and the grid that is already in place [in the area],” Gordhan said in a presentation ahead of Eskom’s interim financial results. “These projects will be funded by the private sector and no state guarantees will accompany them.”

This, he added, means there will be no risk to the national fiscus.

The minister said government wants to ensure the private projects mean Eskom is a beneficiary rather than a bearer of costs. He said more detail about the plan will be published early next year, likely by February.

Meanwhile, Gordhan also announced that Eskom is ramping up investment transmission capacity in areas including the Northern Cape, where private power projects – including solar generation plants – are being built, and where power needs to be “wheeled” across the national grid.

As part of this, an “appropriate” wheeling tariff needs to be determined and a wheeling system put in place to allow certainty for investors that want to use Eskom’s grid to distribute electricity.

‘Fast process’

“This will be a fast process whereby these important regulatory areas will be clarified early in the new year, and Eskom itself will ensure that there is an expeditious way of obtaining approvals and connections and all the requirements that will have to be met by the private sector as they become participants in this process,” Gordhan said.

In a statement issued after Gordhan’s presentation, Eskom said that land in Mpumalanga will be made available to private investors through an auction process.

“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,” the utility said.

“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.

“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 Eskom CEO André de Ruyter in the statement. “The leasing of land would have to be made subject to production being achieved by a contracted date.”

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.   – © 2021 NewsCentral Media