Eskom: Eskom launches power purchase programmes to secure 1 000MW to bolster constrained generation capacity

As part of the broad measures to address the loadshedding crisis, Eskom has today launched three programmes to procure much needed power for the national grid. Initially the programmes will focus on generators capable of supplying more than one Megawatt to the grid. Over time the threshold will be lowered to enable smaller producers to participate.

The combined impact of the programmes, predicted to exceed 1 000MW, will make an important contribution towards reducing the loadshedding burden on consumers.

The aim is to sign the first power supply agreement during the course of the current week, and for the power to start flowing through the grid as soon as possible.

These are:

The Standard Offer Programme, to procure power from companies who have existing generation capacity for a period of three years. The standard offer approach allows Eskom to purchase electricity at an established price calculated at the avoided cost of own generation (including long term energy purchases from independent power producers). The standard offer allows for a static price, which is established each year based on the regulatory approved cost recovery and covers the variable cost of generation. It also allows for a dynamic price option where the price is set day-ahead for each hour of the following day, indicating the avoided cost of generation based on internal scheduling of generators.
The Emergency Generator Programme, to procure more expensive power during periods when the grid is significantly constrained. The programme allows for independent generators to provide energy daily to compete with the Eskom generators in the internal market. The independent generators will supply into the grid based on the offer price and availability provided.
The Bilateral Power Import Programme to secure imports of power to the country from neighbouring countries. Several countries have expressed an interest in selling additional surplus power to South Africa. The programme will provide a mechanism to access such opportunities. Eskom is already importing electricity from some of its neighbours via the Southern African Power Pool, an average 200MW that is being used to augment Eskom generation capacity when the grid is constrained.