Eskom has signed a leasing agreements with backers of private energy producers for the development of renewable energy facilities on the property owned by the state-owned utility in Mpumalanga. HDF Energy South Africa, Red Rocket SA, Sola Group, and Mainstream Renewable Power Developments South Africa are the winning bidders. The businesses will use a combination of battery storage, wind, and solar technology.
These are the first of these agreements to be inked, and they concern land parcels near the Majuba and Tutuka power plants, according to the statement. Within two to three years of the financial close of the new facilities, the grid will be connected. However, the projects are still awaiting environmental, zoning, and other regulatory permits.
The contracts were signed on Friday after Eskom requested bids in April in an effort to increase South Africa’s capacity for energy production through the establishment of renewable power producing facilities by the private sector.
Eskom said in a statement started that the fact that the bids were three times oversubscribed demonstrated investor interest for land with grid connectivity and offers a good indicator that subsequent land parcels would receive favorable consideration. According to the statement, Eskom also noted it will issue new tenders for further Eskom land parcels every quarter going ahead, with an aim to enabling and speeding investment in new renewable generation capacity.
The first batch of successful bidders will now conduct “comprehensive feasibility studies to determine which technologies they will be implementing at each site — wind, solar and battery storage”.
“The exact generation capacity will only be known 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. No national treasury guarantee will be issued … and there will be no risk to or burden on taxpayers or on Eskom.”
Each investor will lease approximately 15,000 acres of land for a period of 25 to 30 years, adding an estimated 2 GW to the nation’s grid. Eskom intends to increase the amount of land accessible near its power plants.
The properties around the Kendal and Kusile power plants in Mpumalanga, as well as the decommissioned Ingagane power plant near Newcastle in northern KwaZulu-Natal, will be the focus of the project’s upcoming phase. In the upcoming months, these parcels will be made available to the market, according to Eskom.