The City of Cape Town has officially started reducing its reliance on Eskom by buying cheaper electricity from local solar producers, aimed at making power more affordable for Capetonians over time.

The City yesterday announced it had concluded two Power Purchase Agreements (PPAs) to buy up to a total of 70MW from independent producers, at cheaper rates than Eskom. More agreements will be announced in the coming months under a competitive tendering process for up to 200MW.

The 20-year PPAs are with solar plants that will be connected to the City’s grid in Atlantis (30MW from JEMPEC), and Philippi (40MW from Make A Difference LLC).

Mayor Geordin Hill-Lewis says there are plans to buy up to 700MW of independent power over time.

“Families cannot be expected to absorb endless Eskom price increases forever – that’s why we are working to end reliance on expensive Eskom power to make electricity more affordable for Capetonians. We are pleased to have sealed the first two power purchase agreements with solar plants here in Cape Town – a first for any South African city.”

Hill-Lewis says the two agreements are cheaper than Eskom, with the City saving 19 – 21% on power purchases compared to current Eskom rates. Price increases on these agreements will also be linked to the Consumer Price Index (CPI), rather than unpredictable Eskom hikes over the next 20 years.

A total of R8bn in power is expected to be procured between the two agreements, which is required to be below Eskom rates over the full 20 years.

Mayoral Committee Member for Energy, Xanthea Limberg, says the agreements will also avoid nearly two million tonnes of carbon emissions, earning the City carbon credits, which can be traded on the open market to generate funds for more infrastructure investment.

Cape Town has already generated R36m in carbon credits via municipal waste-to-energy initiatives that reduce gas emissions at landfill sites.

“With these initial power purchases, we are laying the foundations for a more sustainable and scalable generation programme. This is all made possible by the diligent creation of an entirely new procurement framework for independent power to ensure robust, bankable, successful execution and long-term power delivery to the City.”