Eskom has signed land lease agreements with four renewable energy providers in an attempt to jumpstart South Africa’s power plans.
The company has awarded 6,184 hectares of land parcels around the Majuba and Tutuka power plants, for 25-30 years. These will provide around 2 GW of power to the grid, the company said, with plans to issue more tenders for land every quarter.
The successful companies are HDF Energy South Africa, Red Rocket SA, Sola Group and Mainstream Renewable Power Developments South Africa.
“By making Eskom land available close to the power stations, where there is sufficient grid capacity, we have taken an innovative step to find the quickest way possible and within our scope of influence to boost the country’s generation capacity,” said Eskom CEO André de Ruyter.
The CEO reported that the plans would secure an investment of 40 billion rand ($2.2bn).
Eskom said that, once the plans in Mpumalanga had reached financial close, they should be connected to the grid within 24-36 months.
The question of financial close may be a challenge. South Africa picked winners of its Round 5 renewable energy push in October 2021.
The plan had been to reach financial close on these projects by April this year – but this came and went with no such progress. The first three projects reached this hurdle in late September.
Mainstream signed up to build 1.27 GW of power in Round 5.
Speed is of the essence
The company said there was a “dire need” to reduce pressure on the system by adding as much additional generation as possible, as fast as possible.
Mainstream said it had signed up for a 1,650 hectares. The company general manager for Africa Hein Reyneke said Mainstream was “proud to support Eskom in its initiative to expedite the connection of large quantities of much-needed clean, affordable power to the grid as part of the just transition to renewable energy”.
While Mainstream said it would consider what energy technologies to deploy, France’s HDF Energy gave a more concrete vision.
HDF Energy won 1,782 hectares. The company said it expected to build 1,500 MW of solar photovoltaic (PV). It will also install more than 3,500 MWh of hydrogen storage. The plan has an expected cost of $3 billion.
“While addressing immediate challenges related to the lack of baseload and dispatchable electricity, HDF Energy projects in South Africa will kick start the large-scale industrial deployment of the hydrogen economy in the country and create jobs in Mpumalanga for the workers of the coal industry in transition,” said HDF director for Southern Africa Nicolas Lecomte.
Just transition
The power company issued the request for proposal (RFP) in April this year. It noted strong interest from investors, given the site’s grid connections, with bids three times oversubscribed.
The four companies will now launch feasibility studies to determine which of wind, solar and battery to install. They will sell power to customers on a bilateral basis.
Eskom will earn money from delivering the power via its grid. There is no risk or burden on taxpayers or Eskom, the company said. Power producers gained the ability to wheel power via the grid in August 2021.
De Ruyter said the leasing programme was a “first of its kind”.
He also noted the importance of these investments in areas where coal-fired power dominated. This is a “compelling proof point for the just energy transition to a lower carbon economy”, De Ruyter added.
Up next, Eskom will offer land around the Kendal and Kusile power plants, also in Mpumalanga, and the mothballed Ingagane, in KwaZulu-Natal. Ultimately, it could offer up to 30,000 hectares for these projects.