The National Energy Regulator of South Africa’s (Nersa’s) electricity subcommittee decided, on February 5, not to approve Eskom’s application for the emergency procurement of electricity from eight private generators under its Short-Term Power Purchase Programme (STPPP).
In March 2020, the State-owned utility issued a request for proposals for supply of short-term power under the STPPP scheme, which was first initiated in October 2012 to help Eskom mitigate its capacity constraints and reduce the risk of load-shedding.
Prior to its cancellation in 2017, Eskom was able to procure 825 MW of capacity under the STPPP, much of which was secured from entities such as Sasol and the Kelvin power station.
Eskom was never confident of securing similar levels of energy when resuming the scheme and indicated that it was aiming to procure about 128 MW under the STPPP, which would assist it in mitigating an ongoing supply squeeze that had resulted in a resumption of regular load-shedding.
A maximum contract period of 36 months was specified and Eskom indicated that it would contract only with facilities that had capacities of greater than 5 MW.
By mid-2020, the utility confirmed that the bidding and evaluation process had been delayed by the Covid-19 lockdowns, but indicated that it was still targeting a commercial operation date of on or before February 28, 2021.
In its application to Nersa to have the STPPP costs allowed as pass-through costs, Eskom revealed that it had received 13 STPPP bids but that it had selected only eight, owing to affordability concerns.
The average STPPP tariff was close, the utility said, to the average tariff approved for the final year of the fourth multiyear price determination (MYPD4) period, covering the three financial years from 2019/20 to 2021/22.
The tariff, it stressed, was far below the cost of electricity produced using the diesel-fuelled open cycle gas turbines.
The Nersa electricity subcommittee noted that while STPPP revenue had been allowed for the 2019/20 financial year no further STPPP revenue had been allowed for the two outer years of the MYPD4.
The committee members questioned the legal basis for approving the application, in the absence of further stakeholder consultation.
The committee, therefore, decided it would not approve the application for consideration by the Energy Regulator, but would instead seek greater legal clarity ahead of its next meeting, where the matter would be assessed once again.
Eskom told Engineering News that it had not yet been informed of the Nersa decision and would consider what was still required once it was in a position to study that decision.
The utility said it would not comment further as commercial processes were not yet concluded.