Eskom pins its hopes on renewable energy to add 8,000MW to grid
The procurement of additional power generation capacity by Eskom is slowly gaining momentum. About 8,000MW could be added to the grid between now and 2025 “if all goes to plan”, Eskom CEO André de Ruyter said on Tuesday.
This would go a long way towards plugging the generation shortfall at the state-owned power utility estimated at 4,000MW-6,000MW. It would also allow Eskom to end loadshedding and to fully implement a maintenance programme on its ageing fleet of coal-fired power stations.
De Ruyter said the utility will continue to face generation constraints and a high risk of loadshedding until more power is added to the grid.
Stage 2 load-shedding (when 2,000MW is dropped from the grid) has to be implemented during the night until Thursday as breakdowns at some coalfired plants and high-power demand placed the generation system under “severe strain”.
De Ruyter said that by the middle to the end of 2023, Eskom should start seeing additional capacity come on grid from various power procurement programmes.
“We are really looking forward to that as it will give us the needed head room to carry out much-needed maintenance.”
He welcomed an announcement by the department of minerals & energy last week that 2,600MW of new generation capacity procured through bid window 5 of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) is scheduled to reach financial close by end-April. These projects are expected to come online within the next 18 to 24 months.
BID WINDOW
The department also opened bid window 6, which will procure another 2,600MW of wind and solar energy from independent power producers. The closing date for submissions for bid window 6 was August 11, and De Ruyter said “if all goes to plan” these projects would come online in 2024 and 2025.
From the previous bidding windows about 6,800MW of additional power generation has already achieved financial close, but most of this is from nondispatchable renewable energy.
Non-dispatchable sources, such as wind and solar power, do not provide a consistent supply of energy generation, and the output cannot be controlled by companies providing the electricity because it relies on external factors such as sunshine and wind.
These projects, said De Ruyter, are delivering a load factor of about 25%-30%, translating to an average of about 2,000MW of grid available electricity.
The additional 2,600MW that will be produced through bid windows 5 and 6 will also be non-dispatchable. This has prompted Eskom to increase investment in battery storage to improve dispatchability of variable energy from the REIPPPP.
The distributed Battery Energy Storage Systems (BESS) project involves the development of 360MW storage system in two phases. The World Bank has approved financing of about R5bn for the first phase of the project, and at end-March Eskom awarded four contracts for battery storage of about 200MW to be added to the grid, De Ruyter said.
Eskom is also eager for power from the much-delayed and controversial emergency power projects under the Risk Mitigation Independent Power
Producer Procurement Programme (REIMPPP) to come online. De Ruyter acknowledged some legal issues have to be resolved before Eskom can sign power purchase agreements for the programme.
The RMIPPPP was designed to procure 2,000MW of new generation capacity from a range of suppliers and different energy sources.
The bid winners were announced in early 2021, but rollout of the programme has been delayed due to a court case lodged by a losing bidder that has prevented projects from achieving financial close, and due to delays by Eskom in the signing of power purchase deals with the winning bidders.
De Ruyter said these issues could be resolved within the next six weeks. This would, however, mean another delay to the new end-April deadline for financial close announced by the department of minerals & energy last week.
Commenting on the delay, he said Eskom has a fiduciary duty when it signs contacts with independent power producers to protect the interests of the entity and to ensure it does not enter “unduly onerous contacts” that would cause Eskom financial hardship in the long run.
Eskom is also playing a “proactive role in alleviating [power supply] constraints and adding new capacity”.
The utility issued an inquiry to market on Friday for bids to develop renewable power projects on Eskom land adjacent to some of its coal-fired power stations in Mpumalanga where there is existing grid connection capacity.
“This initiative is intended to allow investors accelerated access to our existing grid, and to enable investment in renewable energy next to our coal-fired power stations,” De Ruyter said.
The maximum amount of electricity generation capacity per project would be capped at 100MW and the lease would be for a minimum of 20 years.
There is adequate grid capacity to accommodate projects with a combined capacity of about 1,000MW during the first phase of the programme, he said.