Cape Town Advances Towards Energy Independence with IPP Procurement

In a significant move toward enhancing energy security and sustainability, Cape Town has made critical progress in its plan to diversify its energy sources through independent power producer (IPP) procurement programs. The initiative, aimed at signing power purchase agreements (PPAs) by the first quarter of 2025, is well underway, with the municipality currently in the midst of the evaluation stages.

During a panel discussion at the IPP and PPA conference, alongside the African Energy Indaba held at the Cape Town International Convention Centre, the City’s generation development manager Shane Prins provided insight into the current status of these programs. With more than 4,000 delegates and 156 speakers participating in this year's conference, Prins's updates were particularly significant for stakeholders in the energy sector.

The city's first IPP procurement program, which seeks embedded power generation from renewable sources, was launched in February 2022. According to Prins, "We will be concluding that evaluation before the end of this month and hopefully have preferred bidder status before the end of April." This forward momentum represents the City's commitment to streamlining renewable energy power plants into its energy grid.

A second program focused on dispatchable power was unveiled in April 2023, targeting more traditional energy sources like gas power and solar PV with battery storage solutions. This tender, which closed in December of the previous year, is also in the final stages of evaluation. Preferred bidders for this program are expected to be announced by the end of June, with the hopes of entering into PPA negotiations shortly thereafter.

However, Prins underscored the complexities and challenges faced by the municipality, including navigating internal governance processes and dealing with IPP and lenders' approvals. He also mentioned the obstacles encountered since commencing the journey in 2020, such as adapting the procurement systems within the municipality and acquiring necessary internal capacities to manage the procurement and interact with financial institutions. "Last year we got a strong transactional adviser to assist with documentations and tender," Prins elaborated, indicating the level of professional consultancy required for the intricate process.

The conversation also featured insights from Xolile Maphanga of Ezulwini Municipality in eSwatini, who resonated with the points made by Prins regarding the legislative environment, transparency, accountability, and the importance of internal capacity building.

These developments in Cape Town have not only put the City on the map as a leader in adopting renewable energy solutions but have also established a template for other African municipalities looking to harness the power of the private sector in addressing energy needs.

The City's advancements in the IPP procurement space herald an era of sustainable energy for Cape Town while setting precedence for transparent and accountable energy procurement in municipal settings across Africa.