SOUTH AFRICA: Cape Town prepares tender for purchase of electricity from IPPs

Cape Town plans to diversify its sources of electricity supply. In a recent statement, Mayor Geordin Hill-Lewis signaled his intention to look to independent power producers (IPPs) to reduce the impact of load shedding on city households and businesses. In the next two weeks, the municipality plans to launch calls for expressions of interest to select IPPs who will feed clean electricity into the Cape Town grid.

This announcement comes at a time when the monopoly of the public company Eskom is strongly contested both in the cities and among other major electricity consumers, including mining operators. At the origin of this malaise, the upsurge in load shedding which is paralyzing economic activities in South Africa.

The favorable opinion of NERSA

“It has become clear to Cape Town that if we want to stop the damage caused by Eskom’s monopoly on power generation, we have to take matters into our own hands. The only way to provide reliable and affordable electricity to our residents is to bring it from somewhere else,” said Mayor Geordin Hill-Lewis. Faced with the resurgence of load shedding, the authorities in charge of regulating the energy sector have decided to liberalize the sector to allow certain towns to obtain supplies directly from IPPs.

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Economic operators now benefit from the same advantages. The National Energy Regulator of South Africa (NERSA) now allows companies to produce up to 100 MW of renewable energy without prior authorisation. These developments come as South Africa seeks to revive its economy, hit by the Covid-19 health crisis.

According to David Maynier, Minister of Finance and Economic Opportunities for the Western Cape, load shedding is costing the South African economy 500 million rand (nearly $33 million) a day. With losses of 75 million rand (almost $5 million) per day, the province has also decided to turn to PPIs.

Jean-Marie Takouleu

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