South Africa’s Energy Minister Jeff Radebe has signed a US $4.6bn contract with 27 independent renewable energy power producers to produce an additional 2 300 MW of electricity over the next five years.
According to Radebe, the signing of the Independent Power Producer (IPP) agreements is a milestone following a long period of uncertainty.
“The long-awaited partnerships have been having numerous delays, including a last-minute court challenge. These 27 new projects are the biggest IPP procurement by the department. They represent a total of US $4.6bn investment,” he said.
Furthermore, Radebe stated that the government has no direct financial involvement in the investment, except for providing support to Eskom in the event of default by the buyer. South Africans will hold a majority 57.8% share in the project companies. On the other hand the balance will be controlled by the Public Investment Corporation and other institutions.
Contrary to the view of the National Union of Mineworkers of South Africa (Numsa), Radebe said the renewable energy mix was going to help bring down the cost of electricity, which has been escalating over the years.
The union and TransformRSA last month approached the North Gauteng High Court in an attempt to block the partnerships.
The Northern Cape will receive the largest share of the investment. It will have 15 new wind, solar PV, and CSP projects. Four new wind farms will be in the Eastern Cape, and the North West will get four solar plants.
Private sector participation in the country’s electricity industry was first approved by Cabinet in 2003, in a bid to boost capacity. Independent producers would contribute up to 30% of the country’s electricity production, and the rest would come from state power utility Eskom.