Eskom has announced that it will lease land to renewable energy producers. Photo: Flickr

Eskom to lease land near power stations to renewable energy producers

Eskom has announced that it will lease land to renewable energy producers in order to increase electricity generation capacity.


Eskom has announced that it will lease land to renewable energy producers. Photo: Flickr

Eskom has initiated an auction process to unlock and make some of the land near its power stations available to private investors for renewable electricity generation. 

The availability of Eskom-owned land to near-ready projects will remove a significant barrier to investment, and help to resolve the country’s power crisis.

The land will be available for lease in a competitive bidding process, initially in Mpumalanga, and will be offered to the private sector for purposes of generating electricity from renewable technologies for their own consumption or for sale to third parties. Mpumalanga has the most coal-fired plants with established transmission and distribution infrastructure.

 “The bidding criteria will favour generators for size and speed of delivery – thus quickest delivery of the most megawatts to the grid in order to help relieve the constraints on the power system,” Eskom Group Chief Executive, André de Ruyter said. 

“The leasing of land would have to be made subject to production being achieved by a contracted date,” added De Ruyter.

The maximum amount of electricity generation capacity per project will be capped at 100MW, and the lease will be for a minimum period of 20 years. Eskom will provide connection up to the nearest network connection point. In terms of the scheme, the land will remain the property of Eskom for the duration of the lease.

Lending additional support to the rapid and urgent addition of generating capacity is the amendment to Schedule 2 of the Electricity Regulation Act of 2006, gazetted by the Department of Mineral Resources and Energy in August 2021. The amendment allows generators to wheel electricity through the transmission grid, subject to charges and connection agreements with transmission or distribution licence holders.

Eskom land leases will fast track renewable energy production

The amendment also presents Eskom with opportunities to sell or lease its properties close to its existing power stations, with established grid infrastructure, to the private sector, enabling the development of renewable plants up to 100MW, in support of President Ramaphosa’s call for “an ambitious, bold and urgent response to the energy crisis”.

This urgent directive to address the energy crisis has also found expression in the Medium-Term Budget Statement (MTBS). 

“Our first and immediate task, in this regard, must be to ensure stable energy supply, reduce the risk of loadshedding and accelerate the transition to renewable energy sources,” Finance Minister Enoch Godongwana said.

The programme’s key objective is to provide relief to the constrained electricity system in as short as possible a time. Among these is the need to bring immediate relief to the system by adding as many megawatts in the shortest possible time, increasing the ability to do maintenance, avoiding load-shedding and reducing the usage of open cycle gas turbines.

“As Eskom retires its aged coal-fired generation plants, this presents an opportunity to transition towards cleaner sources of electricity generation whilst benefitting from the continued use of the existing transmission and distribution line infrastructure. This allows Eskom to utilise the significant portfolio of land it owns across the Mpumalanga province to facilitate the creation of additional generation capacity at minimal cost while removing a significant barrier to investment for the private sector,” said De Ruyter.

Eskom hopes that the project will also enhance Eskom’s reputation through innovative and progressive market offerings by showing a willingness to work with private industry to solve a key country challenge.