IPP enters contract to sell power to electricity trader
Bethlehem Hydro, an independent power producer (IPP) and subsidiary of Renewable Energy Holdings (REH), has entered into a contract under which the full output from its 4 MW Merino hydropower plant, near Clarens, in the Free State, will be sold to electricity trader PowerX.
REH and Bethlehem Hydro CEO Anton-Louis Olivier said the transaction made commercial sense in the context of the current uncertainty in the power market in South Africa.
“The Merino power plant generates more than 25 GWh/y of electricity,” said Olivier, adding that this was one of the first transactions of its kind in the country.
Initially, the Merino plant sold its output to Eskom under a short-term supply programme. However, earlier this year, the parastatal stopped its purchasing power under this programme.
“PowerX was able to offer us [not only] an attractive tariff, but also a long-term contract with the necessary guarantees that such a transaction requires,” Olivier highlighted.
Securing the Merino power plant’s stable and predictable supply enabled PowerX to meet the demand from private customers for electricity from a renewable-energy source.
“We believe that, thanks to the efforts of the Department of Energy and the Renewable Energy Independent Power Producer Office, the electricity market has matured to such an extent that the private sector can now carry the flag and relieve government of the heavy burden of providing National Treasury guarantees [for] renewable-energy projects, while still achieving the benefits of local economic development and direct investment, which the country so desperately needs,” said PowerX CEO Thembani Bukula.
According toOlivier, to date, power purchase agreements on a utility scale have only been possible when the IPP contracts are with Eskom.
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