Eskom has extra energy to sell

ESKOM finds itself in the unusual position of having to find more customers as additional power from renewable energy companies becomes available to the grid by the end of next month.

Energy Minister Mmamoloko Kubayi announced on Friday that independent power producers (IPPs) who had been waiting for about two years to sign their power purchase agreements (PPAs) with Eskom will finally do so, on condition that the price of the power is set at 77c per KWh or less.

Eskom would only sign Round 3.5 and Round 4 of the agreements because of its over-capacity and could not afford to sign agreements which would cost more than 77c per KWh, the minister said.

Eskom spokesman Khulu Phasiwe said that the announcement was a winwin outcome for IPPs, Eskom and the Department of Energy.

Eskom has so far signed 64 PPAs and will sign the remaining 26 agreements with renewable energy companies as per the government’s directive by the end of October.

Energy analyst at EE Publishers Roger Lilley said Eskom would find itself in a very difficult position because it already had a surplus of electricity in the existing coal-fired power stations and the IPPs that it had already signed up.

“Now they have to buy the extra power. Eskom really needs to find extra customers in a hurry,” Lilley said.

To offset some of the overcapacity and the pressure to find more customers, Phasiwe said Eskom aimed to export a minimum of 8% of its power annually, and if it turned out to be more, “all the better for us”.

Last year the utility exported about 12% of its power.

The five power stations that were said to have to close down if Eskom had to sign more IPPs, would not be closed but were likely to be put on “coldr meaning they would be on stand-by.

Lilley said without knowing in detail why the prices of other renewables were more than 77c per kWh it was difficult to comment whether they would be open to negotiation to lower them.

The South African Wind Energy Association said it was pleased with the announcement by the energy minister and that it was an important signal which recognised the contribution of renewable power to South Africa’s economy.

Eskom announced earlier this week that construction of unit one of Kusile power station, which will add 800MW to the grid, was ahead of schedule. — DDC