The decision to allow the City of Ekurhuleni to buy electricity from independent power producers (IPPs) forms part of broader efforts to reduce electricity costs by enabling municipalities to secure competitive prices rather than relying solely on Eskom.
Electricity Minister Sputla Ramokgopa announced at a media briefing in Pretoria that the city had been given the go-ahead following an application.
Ramokgopa said the high cost of electricity was having a significantly negative impact on household incomes.
“The high cost of electricity is eroding, if you like, the purchasing power of households, while also undermining the competitiveness of industry. With the structural change in the country’s energy generation mix, as we pivot increasingly towards renewable energy, supported, of course, by reliable, dispatchable generation, we are likely to achieve our ambition of affordable electricity. These interventions in Ekurhuleni will help us along that path,” Ramokgopa said during a joint media briefing with Ekurhuleni Executive Mayor Nkosindiphile Qhakaza.
Ramokgopa said the private sector in Ekurhuleni stood to benefit significantly from the arrangement, with the benefits expected to filter down to ordinary households.
“The third significance of this is that, in case you didn’t know, Ekurhuleni is the industrial hub of the country. It is the biggest manufacturing centre in the country, with most of the major industries located there.
“This intervention will help those producers manufacture goods using green energy, making their products more competitive. They are also likely to command a premium, depending on the markets in which they sell their products.
“So, this is significant in that sense. What, then, is the energy mix we are talking about? What makes up these 2,400 megawatts? Of this, 1,237 megawatts will come from solar photovoltaic (PV), and 1,137 megawatts of that will be embedded generation.
“What this means is that the electricity will be generated within Ekurhuleni’s municipal boundaries, so the city will not have to rely on wheeling arrangements involving generators outside the municipality. The only electricity wheeled from outside Ekurhuleni will be the 100 megawatts the city may choose to procure from any external supplier, provided the tariff is competitive,” the minister said.
Ramokgopa said he was confident that the new energy mix would enable households in Ekurhuleni to benefit from electricity cost savings, with the overall reduction projected at approximately 8%.
“From a cost perspective, if the city uses embedded solar generation, it is likely to receive a discount compared with what it is buying from Eskom today.
“The consumer will receive a discount of 31% from wheeled energy. For embedded energy, the figure is about 12%. For gas, it is about 11%. Waste-to-energy accounts for 11%, while wheeled gas accounts for a further 4%.
“If you put it all together, this programme, at today’s prices, will be able to bring down the cost of electricity by 7.97%. That is huge,” he said.