More independent power producers (IPPs) should get involved in South Africa’s power generation sector to create a multibuyer market, as opposed to the single-buyer market currently dominated by State-owned power utility Eskom, integrated power company Tata Power MD Anil Sardana believes.
During a recent media trip to Tata’s India operations, he noted that greater competition was needed to enable Eskom and local municipalities to buy electricity from more suppliers who could supply power at competitive prices.
He said this could be done in a similar manner to how Eskom was currently buying power from its neighbours, such as Mozambique.
Meanwhile, Tata Power was considering the potential of participating in South Africa’s Coal Baseload IPP Procurement Programme tender, the deadline of which had been postponed to early November, from the previously anticipated mid-August.
Sardana said that, for a bid to be successful, a company had to show that it was partnering with a coal miner, but most coal miners were already tied into Eskom.
“It means that the coal mines must have surplus coal to be able to enter into an agreement with IPPs. Therefore, the amount of companies able to bid will depend on the amount of coal miners with surplus coal,” he said, adding that, if an IPP chose to import coal, there would again be other challenges.
Responding to a question from Engineering News Online, Sardana said one alternative to this could be an integrated system, whereby a coal mine and a site were paired and the permits and necessary clearances arranged by government departments, which usually took about 18 months.
The site and its adjoining mine would then be offered for bidding and development after those processes had been completed, he explained, stating that this was the way it was done in India, enabling faster growth, as the power producer would then not face regulatory hurdles or delays.
He added that companies operating in the power sector were not experts in obtaining land and, therefore, it would make sense for government to secure the land for development, get the necessary clearances and open it up for bidding.
Tata Power was also participating in the development of two wind farms that were selected as preferred bidders in round two of South Africa’s Renewable Energy IPP Procurement Programme.
The Amakhala Emoyeni and Tsitsikamma Community wind farm projects, in the Eastern Cape, would produce a combined 235 MW of power and were being developed in partnership with mining major Exxaro.
The projects were at an advanced stage of development.