Eskom says that it will lease the land it owns near its power stations through an auction to private investors for renewable electricity generation.
Kicking off in Mpumalanga, private power producers may use the land to generate electricity for their own consumption or for sale to third parties.
According to Eskom, Mpumalanga has by far the most coal-fired plants with established transmission and distribution infrastructure.
“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,” the state-owned power utility announced on Wednesday.
Land leased through the scheme will remain the property of Eskom for the duration of the lease.
“The bidding criteria will favour generators for size and speed of delivery — thus quickest delivery of the most megawatts to the grid in order to help relieve the constraints on the power system,” said Eskom CEO André de Ruyter.
“The leasing of land would have to be made subject to production being achieved by a contracted date.”
The maximum amount of electricity generation capacity per project will be capped at 100MW, and the lease will be for a minimum period of 20 years.
Eskom will provide a connection up to the nearest network connection point.
“Renewable energy is the least cost option for new generating capacity as demonstrated by the REIPP window 5 bid prices,” Eskom stated.
“However, the Transmission Development Plan confirms that areas with the best solar and wind resources have limited capacity to accommodate additional generating capacity.”
Therefore, until the transmission backbone is strengthened in areas like the Northern, Western and Eastern Cape provinces, opportunities for additional generating capacity in other provinces need to be explored.
Eskmo said the key objective of the project is to provide relief to South Africa’s constrained electricity system in as short as possible a time.