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A 75MW array in South Africa’s Northern Cape region, image courtesy of Scatec

Clean Power

The City Of Cape Town Is Proposing To Raise Feed-In Tariffs By 10.15%

The City of Cape Town recently presented its Town 2023/2024 budget under the theme it says is about “Building the future we want for Cape Town. Building a City of Hope for All.” Part of the initiatives announced in 2023/2024 budget speech include more plans to help the City end load-shedding. They said, “It is our mission to end load-shedding in the City of Cape Town.”

It was also announced that load-shedding has already cost the City a whopping R390m in the current financial year alone, which included spending on new generators, fuel, overtime, security, and losses due to theft, vandalism, and lower electricity sales. It is clear to see that besides load-shedding crippling the national economy, it is also adding significant costs to local governments.

South Africa’s Reserve Bank says that for the higher levels of load-shedding, South Africa as a whole loses up to R900 million ($50 million) per day.  Eskom’s load-shedding program is structured in stages, where Eskom sheds a certain quantum of load from the grid to stabilize the grid. So, depending on the severity of the crisis, load-shedding is implemented in stages from Stage 1 to Stage 8, where Stage 1 sheds 1,000 MW of load from the grid and in a Stage 8 scenario, Eskom takes out 8,000 MW of load from the grid. Load-shedding is implemented over 2-hour or 4-hour blocks on a rotational basis depending on the severity of the crises. The electricity crisis is now so bad that the National Disaster Management Centre has classified the impact of load-shedding as a national disaster.

Speaking on measure to help end load-shedding in City, the City says, “In our effort to protect our city from this most glaring of state failures, this budget includes R2,3bn to end load-shedding over the next three years. This amount includes R220m over this three year period on independent power purchases, as well as R288m for our Power Heroes programme to incentivise Capetonians to use less power at peak times to help prevent load-shedding stages.”

Cape Town is also the first city in South Africa to offer households and businesses cash for their excess rooftop solar power. Last year, the City of Cape Town announced that surplus energy will be bought at the approved City SSEG feed-in tariffs, and eligible commercial electricity customers can choose to be compensated in one of the following ways:

  • Off-setting credit against your electricity account
  • Off-setting credit against your rates account or another account in your name
  • Payment

The City’s Mayor Geordin Hill-Lewis later announced that the City aims to buy electricity from as many City-supplied customers as are willing to sell, and that these customers may now produce as much power as they can from their approved systems and feed it into Cape Town’s grid.

Under this plan, the City will also pay these customers an incentive over and above the NERSA-approved tariff.

The Mayor said “As our network of home power producers grows, so will our city’s energy security. This has the potential to be a powerful force to end load-shedding over time, together with our Independent Power Procurement programme, and Power Heroes incentives for voluntary energy savings.”

The National Energy Regulator of South Africa (NERSA) had approved a rate of 78.98c/kWh for the last financial year for the City to pay power sellers. The City also adds a 25c/kWh incentive tariff on top of this. Now as part of the latest budget, the City is proposing to raise this feed-in tariff by 10.15%. The City adds that “This makes solar even more attractive. We want as many residents and businesses as possible to help us end load-shedding over time, and there are no limits to how much power you can sell us.”

Some of the other measure announced in the latest budget speech include R1bn in the Medium Term Framework to operate and maintain the Steenbras pumped-storage hydroelectric plant. This is a critical part of the City’s load-shedding resilience. They add that “the fact that this 44 year-old station performs so well is testament to the power of regular and thorough maintenance.”

The City also said capital expenditures on solar PV installations will amount to R636m over the three years, and it has set aside R50m for battery storage, and R32m for its waste-to-energy program at landfills.

These are very interesting developments and I am sure we will see more of these initiatives from other cities in South Africa. Already some provinces in are looking into large utility scale projects.

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