Eskom to lend a hand to renewable IPPs

Eskom hopes to facilitate access to its electricity grid for developers of renewable energy projects of up to 100 MW in the next three to four months by making land available near the connection points in Mpumalanga.

This aims to accelerate the addition of new production capacity to alleviate the current supply deficit. This will ease the pressure on Eskom and create space to take its struggling power plants offline for maintenance.

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Public Enterprise Minister Pravin Gordhan announced the decision on Wednesday (December 15th) during the presentation of Eskom’s financial results for the six-month period ended September 30th.

The South African Wind Energy Association welcomed the news.

Eskom reported after-tax net profit of R 9.2 billion for the period, compared to breakeven in the same period last year. It forecasts a net loss after tax of R 9.1 billion for the full year. This is a significant improvement over previous projections of a loss of R22 billion for the entire year.

Due to various structural factors such as the higher winter tariffs in the first half of the year, Eskom still performs significantly better in the first half of the year than in the second.

Professor Anton Eberhard of UCT Graduate School of Business, where he heads the Power Futures Lab, commented on the surprising nature of the results:

As the utility saw improvement in all financial metrics, Eskom’s chief financial officer Calib Cassim warned this was due to a 15% tariff increase and government financial support of up to $ 32. billion rand.

He said Eskom’s tariffs do not yet reflect its costs and until they do, the government will have to maintain its aid. For the next two fiscal years, this aid will amount to R21 billion per year.

The outstanding municipal debt has risen to R41 billion and efforts by Vice President David Mabuza to address it have not yet taken hold, according to Cassim.

Gross debt has fallen from R463 billion a year ago to R392 billion, which is still about double what Eskom can provide on its own.

Eskom has requested a 20.5% tariff increase for 2022/23. Energy regulator Nersa released the request last week and invited stakeholders to submit written comments by January 14.

The pricing will be finalized by February 25.

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Regarding the land supply, Eskom CEO Andre de Ruyter explained that the utility has 36,000 hectares of mostly unused land around its coal-fired power plants in Mpumalanga.

The plan is to make this available to developers of renewable energy projects up to 100 MW, who plan to generate electricity for their own use or sell it to third parties.

Eskom will follow a tendering process favoring projects providing the most energy in the fastest time. It offers 20-year leases.

This will on the one hand alleviate the problem of network access for developers who want to make the most of the license exemption announced by President Cyril Ramaphosa earlier this year and, on the other hand, create economic activity in the communities that currently support the old power plants that are expected to be closed in the next few years.

While the best wind and solar resources are available in the North, East and West of Cape Town, the grid in these provinces is saturated. Gordhan has also announced plans to expand grid capacity in those provinces, but said it will take time. In the meantime, the Mpumalanga plan must unblock additional production capacities.

Eskom has expressed the need for additional generation capacity of 4000-6000 MW, without which load shedding will be inevitable and there will always be a shortage of spare capacity to undertake maintenance.

Business Leadership SA has welcomed the land plan. He said in a statement: “If maximum utilization is used, this has the potential to add up to 20 GW to our supply capacity. For example, 400 plants of 50 MW could be developed, or 200 plants of 100 MW, mobilizing huge sums of investment and considerably increasing the electric capacity in South Africa.

De Ruyter said Eskom was ready for the legal separation of the transport business.

He said he would meet with the lenders to get their consent for the transfer of assets to the newly registered National Transmission Company SA, but that he still has to get a new transmission license as the current one is in Eskom’s name. Holdings.

Read: Eskom’s Choice: R300 billion environmental compliance or 16,000 MW shutdown

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