Ekurhuleni gets green light to procure 2,400MW of electricity, with R6.2bn investment expected

The City of Ekurhuleni has been authorised to procure 2,400MW of new electricity generation capacity from independent power producers, in a move expected to reduce its reliance on Eskom and ease electricity costs for residents and businesses.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa announced the development during a media briefing in Pretoria on Monday, alongside Ekurhuleni Mayor Nkosindiphile Xhakaza.

The authorisation follows a Ministerial Determination issued under Section 34 of the Electricity Regulation Act, paving the way for the metro to expand its energy supply through a diversified mix of generation technologies.

The planned energy mix includes 1,237MW of solar photovoltaic power, of which 1,137MW will be embedded generation within Ekurhuleni. It also includes 780MW of natural gas, with 535MW to be wheeled, 183MW of waste-to-energy capacity and 200MW allocated to innovative energy technologies.

Ramokgopa said Ekurhuleni's application was significant because of the scale of the proposed capacity, which exceeds similar procurement initiatives by the City of Cape Town and eThekwini.

“This is monumental in a number of ways. First, the City of Ekurhuleni is the first one to make an application for a Ministerial Determination,” he said.

He noted that Cape Town had pursued 220MW of new generation capacity, while eThekwini's programme involved 400MW.

“This is at a different scale. What this does, potentially, is to free Ekurhuleni from total dependence [on] Eskom. Of course it will continue to be grid-tied,” Ramokgopa said.

The minister said diversifying electricity generation was important to strengthening energy security, particularly amid geopolitical uncertainty, while ensuring that sufficient electricity was available to support economic growth.

He added that increasing the use of renewable energy, supported by reliable and dispatchable generation, could help make electricity more affordable.

R6.2bn investment and potential savings

Xhakaza said the programme was expected to attract approximately R6.2 billion in infrastructure investment and create employment opportunities.

“The City estimates that the IPP programme will attract approximately R6.2 billion in infrastructure investment. This programme is expected to create much-needed jobs for our people, and we are working towards sod turning in some projects before the end of this week,” he said.

The mayor said the municipality estimated that the programme could generate approximately R36 billion in savings on bulk electricity costs over 20 years.

According to Xhakaza, these savings could translate into lower electricity costs for households and businesses, although the actual benefits will depend on how the programme is implemented and passed on to consumers.

He said customers currently paying R3 per unit could potentially save up to 31%, bringing the cost to about R2 per unit.

Xhakaza also illustrated the potential impact on a household consuming 500kWh of electricity a month, saying a reduction in the unit price from R3 to R2 could lower the monthly bill from R1,500 to R1,000 — a saving of R500.

The mayor said the projected savings could also ease pressure on municipal finances and help shield residents and businesses from some of the effects of rising electricity costs.

“Our responsibility is to ensure that these projects translate into real economic opportunities and measurable benefits for our communities,” he said.

The municipality will now work towards moving the programme from procurement to construction and electricity generation, with the aim of creating jobs and delivering tangible benefits to residents and businesses.