The preferred bidders for the City of Cape Town’s 200 MW embedded independent power producer (IPP) programme will be announced in mid-2024, says Energy MMC Beverley van Reenen.

The first power from these projects is expected in 2026.

The preferred bidders for the up to 500 MW dispatchable energy programme will also be announced in the middle of next year, with the first electricity due in 2026/27, notes Van Reenen.

Other power projects within the city include wheeling (up to 350 MW); private small scale embedded generation (SSEG) - with up to 100 MW already completed; small-scale electricity sales under the Cash-for-Power programme for residents and businesses with solar photovoltaic (PV) generation capacity; and city-owned SSEG (up to 20 MW, with 7 MW from the Atlantis plant and 13 MW from solar PV at city facilities).

“We are planning to add approximately 1 GW of independent power from various sources to Cape Town’s grid over time,” says Van Reenen.

“It will assist the city in diversifying its electrical energy supply sources to beyond relying on Eskom alone.

“At the same time, managing demand is key. This is all part of the city’s plan to protect customers from four stages of loadshedding.”

But what happens to these projects should Eskom start winning the fight against loadshedding?

They will go ahead, assures Van Reenen, which is “why the costs of these interventions must be below that of Eskom electricity prices”.

Tariff Reform Required
As more and more households and businesses turn to solar installations to mitigate loadshedding, the decline in revenue from electricity sales has dealt a blow to municipal balance sheets countrywide.

To combat this decline, tariff restructuring will be key to the overall sustainability of service delivery at municipal level, says Van Reenen.

“Tariff reform is required; however, it is not within the ambit of metros and municipal governments to be tasked with this. 

“It is a situation of the national reform of the energy regime and the cost models that are required. 

“Currently – especially with Eskom’s yearly massive price hikes and the demands on service increasing – tariff income does not cover the cost of service provision,” warns Van Reenen.

“With the rapid shift in the energy environment – as we see increasing diversification and private sector generation – the pressure from Eskom in terms of price hikes and lost revenue due to loadshedding, as well as increased vandalism costs due to load-shedding, are all compounding and exacerbating the situation. 

“The need is to make service provision as affordable as possible, but to reduce the risk of bankrupting utilities, or negatively impacting service delivery.”

Van Reenen says it is difficult to calculate how much revenue the City of Cape Town has lost owing to Eskom loadshedding in the past financial year. 

“This is not a simple calculation, however, our energy sales dropped by some 7.2% in the last financial year. 

“If loadshedding had not occurred, the tariff increase we have implemented recently could have been lower.”