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Eskom to sign outstanding power purchase agreements

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Several independent power producers (IPPs) have received budget quotes from Eskom which contain the costs involved to connect them to the national power grid.

President Jacob Zuma put the minds of many at ease during last week’s state of the nation address when he announced that Eskom would sign all outstanding power purchase agreements for renewable energy.

Eskom’s spokesperson Khulu Phasiwe said 64 agreements have been signed so far, with 37 remaining.

The 64 signed agreements will contribute 4,000MW to the national power grid, and the remaining 37 are said to contribute 2,383MW. An agreement for two for open-cycle turbines that will generate more than 1,000MW of energy has also been signed.

Earlier last year Eskom said it was not going to sign anymore IPP agreements due to affordability concerns. However, Phasiwe recently said there was a delay in the signing process because of a scheduled meeting that Eskom had with the Department of Energy.

Once decision to sign the remaining agreements was backed by Public Enterprises Minister Lynne Brown and Eskom’s investment and finance committee, Phasiwe said.

Late last year the renewable energy industry said the delay in signing agreements was holding up investments worth R57 billion (US$4.28 billion).

The South African Renewable Energy Council (Sarec) had also threatened litigation over the delay.

Last Friday, Sarec’s chairwoman Brenda Martin told the Business Day that she had been informed about the budget quotes that were sent to IPPs.

Martin said the budget quotes were received irrespective of the agreed tariff at which they would sell electricity to Eskom. This was despite the power utility’s insistence that it would only sign IPPs on to the grid at a price of 62c/kWh.

While Zuma said the unsigned PPAs will go ahead and seems to be encouraging Eskom to move forward with the programme, the power utility said this might not happen immediately as there were still finer details that needed to be negotiated with IPPs.

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