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South Africa’s utility Eskom has initiated the auction process to allocate land to private investors for renewable energy projects development. The selected power producers through the auction process will be offered a 20-year lease contract and the opportunity to deploy solar PV farms with a capacity of up to 100 MW.
The availability of Eskom-owned land for near-ready projects being developed will remove a significant barrier to investment in the renewable energy sector and help in resolving the power crisis in South Africa, which is faced with an urgent need for additional power generation capacity.
The land for renewable projects will be available for lease in a competitive bidding process According to Eskom, the bidding criteria were designed to prioritize projects with large sizes and speed of delivery. The leasing of the land to the power developers is also subjected to the production condition of achieving goals by a contracted date.
Eskom will offer the renewable energy producers its nearest connection points for the planned projects. The power utility will make part of 36,000 hectares of land it owns in Mpumalanga province available for the power producers to take advantage of the 100 MW licensing threshold announced by the government. Mpumalanga has the strongest transmission and distribution infrastructure, which has most of the coal power plants of Eskom.
In August, the government increased the licensing threshold for embedded generation projects from 1 MW to 100 MW. The new measure – Schedule 2 of the Electricity Regulation Act exempts the power producers from applying for a license but they need to register with the National Energy Regulator of South Africa (NERSA).
The constrained financial situation of Eskom makes it imperative to consider new ways to add new capacity to their electricity system, including leveraging Eskom assets to incentivize the expedited establishment of generating capacity by private power producers.
Eskom CEO Andre de Ruyter, said, “As Eskom retires its aged coal-fired generation plants, this presents an opportunity to transition to cleaner sources of electricity generation while benefitting from the continued use of the existing infrastructure.”
Eskom’s allotment of land for private renewable energy projects is in line with the power utility’s commitment to facilitate investments in further electricity generation infrastructure and to alleviate South Africa’s energy crisis.