South African utility Eskom allocates land for renewable energy producers

South African utility Eskom has launched an auction process to allocate land for large-scale renewable energy projects planned by independent power producers (IPPs).

“The availability of Eskom-owned land to near-ready projects will remove a significant barrier to investment, and go a long way to resolving the well documented power crisis in the country, which is faced with an urgent and critical need for additional generation capacity,” Eskom said in a press release. “The land will be available for lease in a competitive bidding process, initially in Mpumalanga province, and will be offered to the private sector for purposes of generating electricity from renewable technologies for own consumption or for sale to third parties.”

According to Eskom, the bidding criteria were designed to prioritize projects with large size and speed of delivery.

Selected developers will be offered a 20-year lease contract and the possibility of deploying solar parks with a capacity of up to 100 MW. Eskom will also offer IPPs its nearest connection points for the planned renewable energy projects. The province of Mpumalanga, on the other hand, has the strongest transmission and distribution infrastructure, as it hosts most of Eskom's coal power plants.

South Africa‘s government raised in August the licensing threshold for embedded generation projects from 1 MW to 100 MW. The new measure – Schedule 2 of the Electricity Regulation Act – exempts developers from applying for a license but they will be required to register with the National Energy Regulator of South Africa (NERSA). “The amendment allows generators to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with the relevant transmission or distribution licence holders,” Eskom said in its latest press release.

Eskom last year took its first steps to “repurpose” its coal power plants and in November secured funds to finance repurposing of coal-fired power stations due for decommissioning over the next 15 years. Meanwhile, the fifth round of the Renewable Energy Independent Power Producer Procurement Program (REIPPPP) concluded last week has shown that large-scale wind and solar power plants are already able to outperform coal in the country.