Cape Town Launches 500 MW Power Tender To Cut Costs And Boost Energy Independence

The City of Cape Town has taken a major step toward energy independence by launching a tender to procure 500 MW of electricity from independent energy traders and aggregators. With this move, Cape Town becomes the first municipality in South Africa to purchase power at such a large scale from the open market, reducing its dependence on the national utility Eskom.

The initiative is aimed at securing electricity at prices lower than Eskom’s tariffs. At present, the City spends nearly 70% of its tariff income on bulk electricity purchases from Eskom. By sourcing power from multiple suppliers and negotiating competitive rates, the City hopes to reduce costs for consumers while improving supply reliability.

As per the tender details, the City is inviting bids for Power Purchase Agreements (PPAs) ranging from one to ten years. The procurement is open to a mix of energy technologies, including solar and wind, along with gas-based options such as liquefied petroleum gas (LPG) and hydrogen. Other renewable sources are also eligible, provided they meet the required standards of cost efficiency and reliability.

Alderman Xanthea Limberg stated that the programme is a key part of the City’s broader Energy Strategy and Mayoral Priority Programme. The goal is to create a competitive market where licensed electricity traders can supply affordable and cleaner energy. All participants must be licensed by the National Energy Regulator of South Africa or be in the final stages of obtaining approval.

The City has set strict conditions for bidders. Each project must have a minimum capacity of 5 MW, and power delivery must begin within 36 months from the signing of the agreement. In addition, the electricity supplied should not come from existing plants that are already under contract or involved in other tenders. This ensures that the procurement adds new capacity to the system rather than reallocating existing supply.

An important requirement is that all renewable energy benefits, including green attributes, will be transferred to the City. This supports Cape Town’s long-term goal of reducing carbon emissions and moving toward a more sustainable energy system.

By directly engaging with the wholesale electricity market, Cape Town is positioning itself as a leader in municipal energy reform. The 500 MW tender reflects a proactive response to the ongoing energy challenges in the country, focusing on cleaner, cheaper, and more reliable power solutions. Interested bidders have been given until mid-May 2026 to submit their proposals.