Global growth consultant Frost & Sullivan believes that the nascent Southern African independent power producer market will take off from 2007, with a recent study estimating that, triggered by multiple projects currently in the pipeline across the region, the market would grow to earn $13,25-billion in 2012.

“The economies of the southern region of Africa are faced with a growing demand for electricity,” says Frost & Sullivan research analyst Fabrice Essono.

“Booming economies, coupled with the implementation of electrification programmes, have culminated in higher -than -anticipated demand.”

While there is a need for private companies to assist national utilities in expanding their generating capacity, the low price of electricity in southern Africa posed a hindrance to global energy companies looking to invest in the region.

For prospective independent power producers, the low price of electricity became a hinderance in reaching a consensus on the power purchase agreement.

“Consequently, selling electricity at Eskom’s rate would be unsustainable for private producers,” Essono said.
He added that one of the ways of ensuring agreement sustainability was to involve a third party in the negotiations.

“For example, the South African Department of Minerals and Energy is expected to negotiate with Eskom on behalf of independent power producers.”

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