IPP IRP

City of Cape Town drafting ‘mini IRP’ as it prepares way for IPP procurement

City of Cape Town drafting ‘mini IRP’ as it prepares way for IPP procurement

2ND OCTOBER 2020

BY: TERENCE CREAMER
CREAMER MEDIA EDITOR

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The City of Cape Town, which has been pushing for the right for municipalities to procure electricity directly from independent power producers (IPPs) for several years, is currently compiling what it describes as a “mini” integrated resource plan (IRP) to guide its future procurement decisions and actions.

Energy and climate change executive director Kadri Nassiep reports that the city has contracted the Council for Scientific and Industrial Research to develop the mini IRP, which he says should be completed within six to eight months.

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Speaking during a webinar organised by the Italian-South African Chamber of Trade and Industries, Nassiep stressed that the procurement of electricity from large-scale IPPs remained a key objective, despite the prevailing legal and regulatory constraints preventing municipalities from doing so.

The city took the matter to court recently after the National Energy Regulator of South Africa (Nersa) informed it that it could not license an IPP to establish new generation capacity in the absence of a specific determination catering for such capacity from the Mineral Resources and Energy Minister.

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On August 15, Judge Leonie Windell referred the dispute back to the parties, including Nersa, the Minister of Minerals Resources and Energy and the City of Cape Town, for resolution. She did so in terms of Section 41(3) of the Constitution, which  requires all spheres of government to strive to adhere to the principle of cooperative governance, and Section 41 of the Intergovernmental Relations Frameworks Act, 2005.

Windell left the way open, however, for any party to return to the court to seek further relief in the event that the dispute was not resolved through engagement or a possible dispute-resolution process.

Nassiep indicated that the city was concerned that the most recent Ministerial determinations, opening the way for the procurement of more than 13 800 MW of new IPP electricity, still listed Eskom as the sole buyer.

Nevertheless, he noted that scope for municipal IPP procurement was likely to open up in future, given that the Electricity Regulations on New Generation Capacity were in the process of being amended to allow municipalities to develop or procure their own power generation. 

The city wanted the right to procure from IPPs as part of a broader plan to diversify its electricity supply away from Eskom, as well as to reduce its carbon footprint and electricity costs over the medium to long term.

Besides IPP procurement, the city was also working on plans to develop its own generation mostly from ground-mounted solar photovoltaic plants of between 1 MW and 10 MW in size.

In parallel, initiatives were under way to reduce the energy consumption of public and private buildings and enhance the city’s embedded generation programme, through which businesses and households can feed electricity into the municipal grid.

Despite these plans, Eskom would remain the provider of about 70% of the city’s power over the medium term, Nassiep stressed.

Besides developing the mini IRP, the city was also working with the National Treasury on a framework for a municipal-led renewables procurement programme along the lines of the national government’s Renewable Energy Independent Power Producer Procurement Programme.

“We are proposing the establishment of a sustained, credible, planned and coordinated national procurement programme for municipalities that takes into account the national demand and supply options and constraints.”

Nassiep cautioned, however, that its internal assessment points to the likelihood that it could take up to five years before the first IPP power procured by the municipality was integrated into the municipal network. 

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