South African utility Eskom Holdings SOC on Friday said it has signed lease agreements with four independent power producers, which will build clean energy generation capacity at the sites.
This first round of Eskom’s land leasing programme is expected to add 2 GW to the grid. The initiative is making available land with grid connection around existing power stations.
The inaugural agreements concern 6,184 ha (15,281 acres) of land around Eskom’s Majuba and Tutuka power stations in Mpumalanga province. The investors will lease the parcels for 25-30 years. They will now conduct feasibility studies to decide what technologies to use, choosing between wind, solar and battery storage. The capacities of the future power plants will be known after completion of the studies.
The four agreements were signed with HDF Energy South Africa (Pty) Ltd, Red Rocket SA (Pty) Ltd, Sola Group (Pty) Ltd and Mainstream Renewable Power Developments South Africa (Pty) Ltd.
Global renewables developer Mainstream said its deal is for a 1,650-ha site.
Subject to environmental and other regulatory approvals, the generators are expected to be connected to the grid within 24 to 36 months from financial close. The developers will sign bilateral power purchase agreements (PPAs) with customers for the electricity, which will be wheeled across the Eskom grid.
“Eskom’s land leasing programme is a first of its kind and can be used as a case study in the electricity supply industry (ESI) in terms of partnering with private electricity generators to accelerate the connection of additional capacity to the national grid to improve the reliability of supply,” said Eskom Group chief executive Andre de Ruyter. The CEO added that the land leases will attract an estimated investment of some ZAR 40 billion (USD 2.2bn/EUR 2.26bn) to areas traditionally associated with coal-fired electricity generation.
Eskom said there was significant interest in the tender, launched in April, which was three times oversubscribed. The South African utility plans to issue new tenders for other parcels of Eskom land on a quarterly basis. Up to 30,000 ha can be offered for similar projects.
(ZAR 1 = USD 0.055/EUR 0.057)
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