South Africa to procure energy from independent producers amid prevailing power crisis

Gas Pipelines
Gas Pipelines

The South African government on Friday unveiled a plan to buy energy from independent power producers (IPPs) in a rare move to cope with a prevailing power crisis.

The plan, gazetted by the government, will enable the procurement of 6,800 MW of solar and wind generation, 3,000 MW of gas generation, 1,500 MW of coal generation and 513 MW of storage.

Electricity from IPPs must be purchased by state-run electricity utility Eskom, and programs will target connection to the grid as soon as reasonably possible, said Gwede Mantashe, Minister of Mineral Resources and Energy.

New generation capacity is needed to be procured to contribute towards energy security, the minister said.

Electricity produced from the new generation capacity shall be procured through one or more tendering procedures which are fair, equitable, transparent, competitive and cost-effective and shall constitute IPP procurement programs, he said.

Eskom has maintained monopoly on power supply, providing more than 95 percent of the electricity consumed in the country. But the embattled parastatal, staggering under a heavy debt, has failed to provide sufficient electricity for more than a decade, resulting in constant power blackouts, particularly in recent months.

Many customers, including the City of Cape Town, have applied for government permission to purchase directly from IPPs, but to no avail.

The governmment’s plan to allow IPPs to come on the stage is seen as a breakthrough in addressing the country’s power shortage.

The opposition Democratic Alliance (DA) welcomed the eventual gazetting of the plan, albeit delayed for more than two months since the National Energy Regulator of South Africa (NERSA) gave this procurement the green light.

South Africa cannot afford more delays or government interference in the electricity supply sector, the party said.

“If we are to break free from the shackles of the Eskom monopoly, IPPs must be encouraged and incentivized to take up the slack of the failing state-owned entity,” said the DA.

The DA called on the IPP Office to speedily issue the necessary requests for proposals and open the next bid window for renewables.

“If we are to ensure our economy is restored to a stable footing, we must safeguard and foster our energy security,” said Kevin Mileham, DA Shadow Minister of Mineral Resources and Energy.

This entails acting with speed to call for applications, and then processing those applications rapidly and efficiently, he said.

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