The South African state-owned power utility Eskom has signed lease agreements with four independent power producer investors, including HDF Energy, Red Rocket, Sola Group and Mainstream Renewable Power for the commercial lease and use of land parcels around the Majuba and Tutuka power plants in Mpumalanga province for the construction of renewable capacity, contributing an estimated 2 GW to South Africa’s electricity grid.
The four companies will lease a total of 6,184 hectares of land for a period of 25-30 years each. The projects are expected to be connected to the grid within 2 to 3 years from financial closure, subject to environmental, land zoning and other regulatory approvals. HDF Energy (France) secured 1,782 hectares of land to develop several baseload power plants. This land leased represents six different locations where 1,500 MW of photovoltaic plants will be deployed with more than 3,500 MWh of hydrogen-based long-term storage. These projects represent an investment of US$3bn. Mainstream Renewable Power (Ireland) agreed to lease a 1,650 hectare site.
The bidders will conduct feasibility studies to determine which technologies they will be implementing at each site – wind, solar and battery storage. The exact generation capacity will only be known once the studies have been completed. They will sell the electricity on a bilateral basis to customers that will sign power purchase agreements with the developers. The electricity will be wheeled across the South African grid, generating revenue for Eskom from its existing assets.
Eskom issued a request for proposal (RFP) in April 2022 targeting 2.6 GW of renewable capacity, including 1.6 GW of onshore wind and 1 GW of solar. The tender was three times oversubscribed. This is the first batch of lease agreements to be signed with private companies. The power utility plans to auction parcels of land around its plants and other sites where there is sufficient grid capacity to connect renewable plants every quarter going forward. Around 30,000 hectares are expected to be made available for renewable capacity. The next phase of land will focus on properties around the Kendal and Kusile power plants in Mpumalanga, as well as the retired Ingagane power plant in Newcastle, KwaZulu-Natal.
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