Energy News

Cape Town Launches 500MW Tender to End Load Shedding, Boost Economy

Published by
WIlliam Dube
  1. Cape Town’s Mayor, Geordin Hill-Lewis, announced a 500MW dispatchable energy tender as part of the city’s strategy to combat load shedding and reduce reliance on national utility company, Eskom.
  2. The plan includes a diverse range of initiatives, such as partnering with dispatchable technology-focused power plants, investing in city-owned solar plants, and encouraging voluntary energy savings through incentive schemes like the Power Heroes Programme.
  3. With a R2.3 billion budget allocated to end load shedding, Cape Town aims to become a model for sustainable energy management and economic growth in South Africa.

Cape Town Mayor Geordin Hill-Lewis announced that the city will issue a 500MW dispatchable energy tender as part of a comprehensive strategy to protect residents from the first four stages of load shedding within the next three years. This ambitious initiative aims to make Cape Town the first metropolitan area to break free from the stranglehold that Eskom, the national utility company, has on South Africa’s power supply.

Launching on April 6, 2023, the 500MW power purchase tender will solicit competitive proposals from various energy sources. The city’s plan is to diversify its power generation portfolio by partnering with plants that focus on dispatchable technologies, such as gas-to-power solutions. Additionally, Cape Town will seek proposals from potential independent power producers (IPPs) to purchase electricity generated through dispatchable technologies.

In order to be considered for the tender, power sources must be capable of generating substantial electricity within the city-supply area. Successful bidders will enter into a 10-year Power Purchase Agreement (PPAs) with the city, and multiple contracts may be awarded.

Mayor Hill-Lewis unveiled the city’s budget on March 29, which included a R2.3 billion plan to end load shedding. Key components of the plan are:

  • R220 million to purchase power from the open market
  • R288 million for the Power Heroes voluntary energy savings incentive scheme
  • R53 million in ‘cash for power’ payments for solar power contributions from residents and businesses
  • R640 million for city-owned solar plants
  • R50 million in battery storage
  • R1 billion to operate the Steenbras Hydro Pumped Storage Scheme

Cape Town’s load shedding protection plan is progressing steadily, with phase 1 of the 200MW renewable energy from IPPs tender remaining on track. The city also anticipates awarding contracts to preferred bidders this month for the Power Heroes Programme tender, which encourages residents to voluntarily save energy through third-party incentives.

For the 2023/24 period, the cash for power feed-in tariff increased by 10.15%, with an additional R0.25 per kWh incentive. Furthermore, Cape Town has issued a Request for Information to explore energy trading solutions, including market operation and underwriting services, energy aggregation services, and other energy trading platform services.

As the city embarks on this significant effort to combat load shedding and reduce its reliance on Eskom, Cape Town stands as a potential model for sustainable energy management and economic growth in South Africa.

WIlliam Dube

William Dube is a finance and economic news expert with over 10 years of experience in economic anaylsis, financial product assessment and market analysis. With a numerous certificates from prestigious universities including but not limited to Yale University and the University of Pennyslivenia. William specializes in providing insightful news developments in South Africa and commentary on investment strategies, risk management, and global economic trends. You can contact him on william@rateweb.co.za

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Published by
WIlliam Dube

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