The city of Cape Town has signed two long-term power purchase agreements that will allow it to procure 70 MW of solar energy from independent producers in Atlantis and Philippi. The city stated that these agreements will secure electricity at tariffs lower than current Eskom prices.
These two 20-year agreements stipulate the purchase of 70 MW of solar capacity from facilities in Atlantis and Philippi, which is part of the City's efforts to reduce dependence on Eskom. Over the next two decades, the City plans to purchase electricity worth approximately 8 billion rand through these agreements.
At a meeting on Monday, Mayor Geordin Hill-Lewis noted that these agreements represent an important step toward providing residents with more affordable and reliable electricity. He emphasized that families cannot constantly absorb rising Eskom prices, so they are working to decrease reliance on expensive Eskom energy and make electricity more accessible for Cape Town residents.
Hill-Lewis added that he was pleased to sign the first two agreements with solar power stations in Cape Town, which is unprecedented for any South African city, and that future plans include procuring up to 700 MW of independent capacity.
Specifically, the agreements guarantee 30 MW from the JEMPEC solar power station in Atlantis and another 40 MW from the Make a Difference LLC solar power station in Philippi.
To ensure stability, annual price increases under these contracts will be linked to the Consumer Price Index, rather than future Eskom prices. Member of the Majority Energy Committee, Xanthea Limburg, reported that the agreements will also help avoid nearly two million tons of carbon emissions, granting the City carbon credits that can be sold on the open market to finance further infrastructure projects.
As a result of these agreements, the City will be able to obtain carbon credits that can then be monetized on the open market to raise funds for infrastructure development. It is worth noting that Cape Town has already earned 36 million rand from carbon credits generated by municipal waste-to-energy projects, which reduce landfill gas emissions.
These two solar agreements mark the beginning of a much larger program for independent energy sources, within which the City intends to ultimately procure up to 700 MW from private producers.