Metros in a race to get Eskom off their backs
South Africa’s major cities are in a race to roll out alternative energy plans to reduce and eventually eliminate load shedding, as Eskom’s well-publicised woes seem unlikely to be resolved for years to come.
It’s not just renewable energy they are after as a way to limit the impact of Eskom load shedding. Gas, solar, wind and better energy management feature strongly in these plans.
eThekwini Municipality, which includes the port city of Durban, is the latest metro in South Africa to announce a large-scale renewables project aimed at reducing the impact of load shedding.
How load shedding is crippling municipalities
National Treasury’s Technical Advisory Centre last week green-lighted the municipality’s plans to procure 400 megawatts (MW) of new generation capacity, comprising 100MW of solar and 300MW of gas-to-power in 2025 and 2026 respectively.
“The procurement of 400MW will restore energy security, reduce the impact of load shedding, reduce reliance on the national grid, improve economic development and create job opportunities,” said eThekwini Municipality in a statement last week.
Many smaller municipalities – among them Orania, Mossel Bay, Stellenbosch, Overstrand, Saldanha Bay, Drakenstein and Swartland – have likewise announced plans to find alternatives to Eskom power.
The rush to renewables, while reducing the inconvenience of load shedding for residents, has another benefit in beefing up municipal revenues which took a serious hit in 2022 due to the 205 days of load shedding they had to endure.
In some municipalities, electricity sales account for 80 percent or more of revenue, while in Cape Town and Johannesburg electricity sales account for 32 percent and 25 percent of revenues respectively.
Earlier this year, Joburg announced plans to secure 500MW of electricity, after issuing requests for proposals (RFPs) for short-term power-purchase agreements from independent power producers (IPPs). These RFPs were for 36 months, though metros and municipalities are pressing for longer-term contracts of the kind recently concluded by eThekwini.
Joburg hopes to slash three stages of load shedding, while Cape Town’s even more ambitious plans aim to eliminate four.
Joburg plans add 74MW of power by bringing back into service two gas-turbine plants, and save 85MW through the installation of ripple-relay systems which allow the city to remotely disconnect high energy devices such as geysers.
A further 322MW will be saved through better power control systems using smart meters that will throttle rather than shut off power to households during peak demand times. Joburg gets 90% of its energy from Eskom, with the balance coming from the Kelvin Power Station in Kempton Park.
The problem facing all metros is how to deal with peak-hour demand in the mornings and evenings given the relatively low availability factor from renewables.
Many metros plan a combination of renewables, gas and diesel to deal with the load shedding crisis. For the time being, the plan is to reduce the impact of load shedding as, for most municipalities, going completely off grid is unrealistic for the foreseeable future.
In his State of the Nation address in February, President Cyril Ramaphosa said reforms are being enacted to allow more private power generation, adding that there are more than 100 projects that are expected to provide over 9 000MW of new capacity over time.
“A number of companies that have participated in the renewable energy programme will soon enter construction and deliver a total of 2 800MW of new capacity,” said Ramaphosa.
Cape Town Mayor Geordin Hill-Lewis says the city plans to end load shedding in the next four years. In 2022 it put out a tender for 200MW of renewable power from IPPs, with an additional 60MW saving from better electricity demand control by rewarding residents for reducing demand at peak times.
The plan allows businesses and residents generating their own electricity to sell back to the city for cash. More recently, the city announced plans to procure an additional 500MW from suppliers of renewable energy and gas-to-power providers.
What is interesting in Cape Town’s case is that most of the power being purchased from IPPs will be cheaper than Eskom power, but once battery storage is included, the costs will be higher.
This may not trouble many businesses and residents, who appear willing to pay a small premium to end load shedding. Cape Town is also looking at the economics of upgrading the Steenbras hydro plant, already used to supply 180MW of clean power during peak demand.
Ekurhuleni and Nelson Mandela Bay
Also weaning itself off the grid is Ekurhuleni in the East Rand region of Gauteng, which last year announced plans to acquire between 150MW and 680MW of renewable power from IPPs.
The city has installed rooftop solar panels on most metro-owned buildings and is encouraging residences to do the same.
Not to be outdone, the Nelson Mandela Bay Municipality this month announced plans to build a R2.7 billion solar power plant as part of its effort to reduce load shedding for local residents.
The first phase will begin later this year and will add 150MW to the local grid, with plans for a further 125MW to be added later.
The city says it is interested in purchasing a further 100MW from IPPs in a city famous for its wind and sunshine.
Red tape … and Mantashe
eThekwini appears to have broken new ground for other municipalities navigating the energy production red tape that Ramaphosa has foresworn. It won approval from Treasury’s Technical Advisory Centre under the new procurement guidelines outlined in the Municipal Financial Management Act, aimed at providing guidance for municipalities procuring new generation capacity.
Under the Electricity Regulation Act, Minister of Mineral Resources and Energy Gwede Mantashe is required to issue a so-called Section 34 approval for new, large-scale electricity generation.
It remains to be seen whether this puts a crimp in plans to roll out new power plants, though some metros appear ready to wave this aside and push on with their plans regardless. -Moneyweb