Western Cape names candidate municipalities to be primed for direct IPP procurement

17TH MARCH 2021




Six Western Cape municipalities, as well as the City of Cape Town, have been named by Western Cape Finance and Economic Opportunities Minister David Maynier as candidates to participate in the first phase of the province’s Municipal Energy Resilience (MER) project.

The MER initiative, which was unveiled in 2020, has been established to enable the development of municipal energy projects in the province in line with recent changes to the country’s energy regulations, empowering municipalities to purchase energy directly from independent power producers (IPPs) and/or to develop their own generation facilities.


The six municipalities identified by Maynier are Drakenstein, Mossel Bay, Overstrand,

Saldanha Bay, Stellenbosch and Swartland, while the City of Cape Town, which has already made ground-breaking steps towards procuring from IPPs, was also set to collaborate with the province on the MER scheme.


In January, the Stellenbosch Council adopted a resolution to commence with an investigation into the use and generation of alternate electricity energy supplies, in line with the changes to the Electricity Regulation Act regulations promulgated in October 2020.

The province planned to spend R48.8-million over the medium term on the MER project and would provide a further R20-million in the provincial reserves to support municipalities to take advantage of the new regulations.

The MER project was being spearheaded by the province’s Green Economy unit, within the Department of Economic Development and Tourism, working in collaboration with the Department of Local Government and the Provincial Treasury.

The candidate municipalities were identified following a “readiness evaluation” to determine which municipalities were most equipped and met the conditions for developing their own power generation projects and procuring power from IPPs.

The regulations stipulate that only municipalities “in good financial standing” would be allowed to develop or procure their own power generation and Maynier also acknowledged that IPP procurement was a complex task which municipalities might not have the policies, plans, resources, funding, or procurement expertise to implement.

“Now that the candidate municipalities have been announced, we will be confirming willingness and commitment through a Memorandum of Understanding, and then working closely with them in the first phase of the MER Project to identify pioneering energy projects and develop a road-map to roll out the projects,” Maynier said in a statement.

“This process will consider multiple pioneering renewable-energy technologies and scales, cost options, scale of investment required, location issues, risks, municipal readiness needs, infrastructure needs, timelines to get capacity onto the grid, transaction and procurement mechanisms and regulatory issues.”

Maynier added that one of the objectives of the MER project was to enable municipalities to buffer their residents and businesses from the impacts of load-shedding, which cost the Western Cape economy about R75-million per stage, per day.

“When it comes to the economy Covid-19 is a left hook, and load-shedding is a right hook, which together often results in a knock-out blow that risks compromising economic recovery,” he said.