The city of Cape Town has signed two long-term power purchase agreements that will allow it to acquire 70 MW of solar energy from independent producers in the Atlantic and Philippi areas. The city stated that the terms of these contracts will ensure electricity at rates lower than the current prices set by Eskom.
The Cape Town administration announced the signing of the first power purchase agreements with private solar energy producers. These agreements provide for the supply of 70 MW of solar capacity to the city from facilities in Atlantic and Philippi over the next twenty years.
According to city representatives, these deals will help reduce dependence on Eskom and lead to savings of between 19% and 21% compared to current Eskom tariffs.
Mayor emphasized the need to reduce the burden on residents
At a press conference on Monday, Mayor Geordin Hill-Lewis noted that these agreements are an important step towards providing residents with more affordable and reliable electricity. Geordin Hill stated that families cannot indefinitely bear the rising costs from Eskom, so they are working to eliminate expensive Eskom energy and make electricity more acceptable for Cape Town residents.
He added that he was pleased to sign the first two agreements with solar power plants in Cape Town, which is unprecedented for any South African city, and that there are plans to acquire up to 700 MW of independent capacity in the long term.
The two signed agreements concern 30 MW from the JEMPEC solar power plant in Atlantic and 40 MW from the Make A Difference LLC solar power plant in Philippi. Over the entire 20-year period, the city expects to purchase electricity worth approximately R8 billion.
Use of the Consumer Price Index will ensure tariff stability
The agreements also stipulate linking price increases to the Consumer Price Index (CPI), instead of depending on future price hikes by Eskom. Alderman Xanthea Limburg, a member of the Majority Committee on Energy, noted that these contracts will also help avoid emissions of nearly two million tons of carbon, allowing the City to receive carbon credits that can be sold on the open market to finance further infrastructure projects.
Previously, Cape Town had already received R36 million in carbon credits through municipal waste recycling initiatives that reduce gas emissions in landfills.