De Ruyter thrilled with 18 IPP projects

• Eskom auction will unleash 1,800MW • Producers can wheel power into grid or sell to firms

In a move to expedite independent renewable energy generation, Eskom has identified 18 winning bids for an auction that it took to market in April to offer independent power producers (IPPs) use of vacant land with direct access to the national grid.

The land, owned by Eskom, is situated around coal-fired power stations in Mpumalanga. The state-owned utility owns about 36,000ha in the province and this first round of bidding made available 4,000ha to independent renewable power producers.

At this stage, however, no contracts have been signed as the companies must first obtain environmental impact assessment clearance. The companies cannot be named because no contracts have been signed as yet. Eskom will make an announcement of the successful companies once the processes have been finalised.

In an exclusive interview with Business Day, Eskom CEO André de Ruyter said the process was a “tremendous success”, and that Eskom was “extremely pleased with the outcomes.

“We had 21 very credible bidders for 18 parcels of land that was made available for bidding. We now have a winning bid for each of the 18 sites as well as two or three backup bids.”

The winning bidders will be announced within the next few days. Each project will comprise 100MW of energy generation from solar or wind.

All the development costs will have to be covered by the winning bidders and Eskom will earn some money from the lease of the land.

“We hope to sign the land lease agreements with the successful bidders by August.

“This will add 1,800MW to the grid, which will come at no cost to the taxpayer or require guarantees from National Treasury,” De Ruyter said.

“Each of the projects will now have to undergo an environmental impact assessment before construction can start. This normally takes about 18 months, but hopefully we can get support from the environ

mental affairs department to accelerate the process.”

The initiative was an indication of the “very positive impact of the liberalisation of the energy sector” and the opportunity this creates to “leverage the appetite of private capital to invest in generation capacity with grid access”, De Ruyter said.

Eskom does not have any power-purchase agreements with winning bidders. The power generated will be wheeled across the grid, but Eskom did not require “transparency on their marketing arrangements”.

“It is up to them who they sell that power to, but I am aware that some of the developers are in contact with very large power consumers and they will then no doubt conclude power purchase agreements with those users. In the process they will alleviate pressure on the Eskom generation system,” De Ruyter said.

The state-owned power utility will make additional parcels of land available in due course, but De Ruyter was not able to confirm the date of a new bidding round.