The South African Independent Power Producer Association (SAIPPA) expects to meet with Eskom later this month to discuss its concern that the State-owned entity’s proposed renewables projects may not be subjected to the same grid-access rules that are currently applied to independent power producers (IPPs).

The association has also written to the Competition Commission highlighting the risk for market-dominance abuse should Eskom be allowed to bypass the prevailing Interim Grid Connection Allocation Rules (IGCAR) when moving to develop new renewables assets in close proximity to coal stations that are scheduled for retirement in the coming years.

Eskom has outlined plans to build 2 GW of renewables by 2026 and increase its renewables generation to close to 6 GW by 2030, and also intends establishing a standalone business known as Eskom Green in the coming year.

At its recent results presentation, it said that 43%, or R139.5-billion, of its planned capital expenditure of R320-billion for the coming five years would be directed towards Eskom Generation, including R18.5-billion for renewables and gas projects.

In a letter to the commission, SAIPPA chairperson Leoné Human says the association supports fair competition and welcomes the participation in the market of all generators, including Eskom Generation. 

“Nonetheless, such competition must take place on equal and impartial terms. To achieve this, it is essential that Eskom Generation is subject to the same grid-allocation rules, requirements, and timelines that are applied to IPPs.”

She notes that the IGCAR rules have been pursued by Eskom to address the shortage of adequate grid connection and evacuation capacity through a ‘first-ready, first-served’ approach.

“In the context of Eskom’s programme to develop renewable energy generation facilities at existing power stations, it appears to be assumed that the associated grid-connection capacity is automatically available to them. 

“We do not believe this assumption is justified. Once the term of a power purchase agreement has ended, the grid connection previously allocated to an IPP is no longer reserved for that facility. Accordingly, the same grid allocation rules should be applied consistently across all entities, including the various divisions of Eskom.”

SAIPPA’s concerns follow on from the release, on August 19, of an Eskom request for proposals inviting large power users to procure solar electricity from Eskom projects with a capacity of 291 MW.

The solar generators will be built in line with its repowering and repurposing strategy on land in close proximity to coal stations, with the earliest project expected to reach commercial operation by 2027.

Eskom has also insisted that the grid-connection application process will be non-discriminatory and tells Engineering News that all applications, including Eskom’s, are being subjected to the same requirements.

Nevertheless, SAIPPA is concerned about the potential risk for market dominance, describing the functional separation of the National Transmission Company South Africa as insufficient to ensure a genuine level playing field.

Human tells Engineering News that the Competition Commission has confirmed receipt of its submission, and that a separate letter has been directed to Eskom, in which SAIPPA has also requested a meeting at which it intends raising its concerns directly.

Eskom has also responded to the letter and it is anticipated that SAIPPA will meet with Eskom Grid Access Unit head Seetsele Seetswane, and possibly other senior executives, before the end of October.

“We have a good relationship with Eskom and they responded positively to our request to engage on our concerns,” Human tells Engineering News.

She also notes that the National Energy Regulator of South Africa (Nersa) is busy finalising the Grid Connection Allocation Rules and SAIPPA, thus, intends approaching the regulator after its meeting with Eskom to ensure that the interim rules are being followed.

“From our side we will determine our next step – either a formal complaint to the commission and/or a Nersa engagement – after our meeting with Eskom,” Human reports.