Joburg looks to secure electricity from private producers

FIFI PETERS: I’m not too sure what stage of load shedding we are on right now, whether we are being load shed at this present moment. Stage 3? Okay. Apparently we are on Stage 3. I don’t know what happens at City Power, but I imagine that there are quite a lot of unhappy residents in Johannesburg who have to contend with the power cuts which are very inconvenient – not only for households, but also for business.

So, in a bid to reduce its dependence on Eskom and its vulnerability to load shedding, the City of Johannesburg has put out a request for proposals to IPPs, independent power producers, to possibly supply it with alternative energy. Currently the city is getting around 90% of its power from Eskom, meaning that when Eskom’s lights go down, so do the rest of the lights in the City of Johannesburg.

We have the MMC for Environment and Infrastructure Services at the City of Johannesburg, MMC Michael Sun, on the Market Update for more. Sir, thanks so much for your time. It is good to speak with you again. This was coming and I think the recent changes to regulations – which are now allowing local governments and government entities to secure their own power – are helping. But just give us the detail of the RFP [request for proposals], sir, how much renewable energy you’re looking to get out there, what kind of energy mix you’re looking to create.

MICHAEL SUN: Thank you very much, Fifi. Great talking to you again. Currently in Johannesburg we are looking for about 500 megawatts [MW] in order to bridge that gap of load shedding, and the demands by our customers.

Just to take your listeners back a little bit, in April this year we held the first ever Energy Indaba in Johannesburg. We spoke to the industry, [indistinct], academics, role players, and this process then culminated today from City Power in a request proposal. This request has been issued asking those available and ready suppliers in the form of independent power producers to come and engage with the City and say they are able to supply us with capacities.

And by the way the date is January 31, 2023 – we’re then hoping that we have this big number of proposals and we’ll then be taking them to the Department of Mineral [Resources] and Energy and say: “We’ve got so much in proposals; please give us the go-ahead.”

Then we will be entering into power purchasing agreements with those IPPs, and start to feed that capacity into the grid so that we can breach the gap of load shedding.

For example, we are currently in Stage 3. We are hoping that with all this additional capacity we’ll then be able to move our residents two levels down to Stage 1. So really the impact would be that the consquences felt as a result of load shedding would be a thing of the past for the residents and the customers of Johannesburg.

FIFI PETERS: Music to our ears. Can I just ask, do you have your window down – and could you just close it for us?

MICHAEL SUN: My apologies. I don’t have my window down. It’s very noisy in the place where I am.

FIFI PETERS: Oh, okay. We want to make sure that we catch every detail of what you’re sharing with us right now. So 500MW you said, and I imagine that’s a combination of solar and wind. What is the ultimate vision? Right now 90% of your power comes from Eskom. What would you like to bring this down to, and over what time period?

MICHAEL SUN: We believe that load shedding is here to say, judging and listening to what Eskom has been saying to us, and what’s been announced.

We are not entirely positive that in the short space the nation will be able to get away from load shedding.

What we really want to do – 500MW is the demand we are looking at. So with the growing population in the City of Johannesburg we certainly want to ensure that we get as much capacity – in fact, much of that we want to ensure is green and renewable energy.

If you are able to produce electricity from your solar panels, we say come and talk to us.

We want that electricity, and we also want to get a very fair response from the market so that we get best value for money, because those benefits will ultimately pass on to our residents, so we are able to save money in their pockets.

But then again this is something that we’ve been planning for months. We really wanted to make sure that this is a process and exercise where we tick all the boxes in terms of legislation, regulation and process.

But it’s the first step. It may seem a very small first step, but certainly it’s a positive step in the right direction.

We really want to then share this experience and our learnings and our resources with our neighbouring municipalities – Tshwane, Ekurhuleni, Mogale City – and say that is the province of Gauteng [that] was then able to find those additional alternative mixed sources of energy, so that eventually we as a province are able to stay away from this load shedding effect.

Unfortunately not a total disconnect from Eskom, because Eskom is the biggest power supplier of the country. But we certainly want to breach that gap where Eskom should allow the load shedding, we are saying to our residents that you’ll be spared.

FIFI PETERS: Do you have a budget in mind, an idea of how much your own energy transition as the city will cost you?

MICHAEL SUN: Fifi, at the moment this whole programme of IPPs would then be funded from our usual bulk purchases.

In other words, whatever monies we spend to buy electricity from Eskom, we’ll use part of that to buy from IPPs. But there will be a process where we have a Just Transition in terms of the conventional power supply.

For example, we have another IPP in the form of Kelvin [Power Station, in Kempton Park] that the users can call to generate the electricity. We certainly are looking at the available funding.

It’s very interesting what the international world has on offer. I’m certainly watching COP27 very closely and looking at the resources available for those [in terms of the] Just Transition, where we are able then to again transfer those benefits and resources to our residents and to our job markets where it’s most needed, to ensure that we have the best of both worlds, where we are able to have an uninterrupted supply of electricity on the one hand, and then our residents, especially the young people, are able to integrate themselves into that new energy space.

So it’s really exciting for us. We are positive and we remain committed as a multiparty government. Our executive mayor Dr Mpho Phalatse has certainly done a lot of work in leading us to where we are now.

FIFI PETERS: Certainly she has. Lastly, how is this ultimately going to affect our electricity bill as residents of the City of Johannesburg, this route to procure more power from independent power producers? And will it make it cheaper? Is it going to be the same, or could we be paying more, potentially?

MICHAEL SUN: That’s a very interesting question. In terms of City Power, we also need to generate revenue, but it is not our financial aim to break our residents and customers’ pockets.

So in the short term we are probably not going to see a lot of pricing difference, because those pricings are regulated by Nersa.

We do have to approach Nersa on the pricing that we pay to the IPPs.

So in the short run there won’t be a lot of savings, but in the long term where we publish the second RFP, that’s where we are looking at much bigger, larger-scale suppliers, then we are able to negotiate for better prices, and certainly those savings that we see there we’ll pass on to our residents.

That’s where you’re going to see savings in the pockets of our residents..

FIFI PETERS: All right. MMC, sir, thanks so much for your time with us. A very important story. Michael Sun is the MMC for Environment and Infrastructure Services at the City of Johannesburg.

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