Cape Town Signs First Solar PPAs, Cuts Reliance on Eskom

Cape Town has signed two power purchase agreements (PPAs) for 70 megawatts of solar power, becoming the first South African city to buy electricity on the open market and reduce its dependence on state-owned utility Eskom.

The 20-year contracts cover 30 megawatts of solar capacity from JEMPEC and 40 megawatts from Make A Difference LLC.

Both plants will connect to the city's grid in Atlantis and were awarded through a competitive bidding process for up to 200 megawatts of capacity.

Mayor Geordin Hill-Lewis announced the signings on Monday, saying the deals would save the city between 19% and 21% on power purchases compared with current Eskom rates. Unlike Eskom's tariffs, which the city says have risen unpredictably in recent years, price increases on the new contracts will be linked to the Consumer Price Index (CPI), a measure of inflation that tracks the cost of a basket of goods and services over time.

City plans to buy up to 700 MW independently

Hill-Lewis added that the agreements mark the start of a broader shift away from Eskom-supplied power. "Families cannot be expected to absorb endless Eskom price increases forever," he said, adding that the city intends to buy up to 700 megawatts of independent power over time and expects to sign further PPAs in the coming months.

The move builds on work already under way in the city. During the current municipal term, Cape Town completed its first own-built solar-plus-storage plant in Atlantis, combining 7 megawatts of solar generation with 10 megawatt-hours of battery storage, and has plans for additional projects and the refurbishment of existing plants.

Whether other South African municipalities follow Cape Town's approach to procuring power independently of Eskom is likely to depend on how quickly the city's new solar contracts translate into savings once the plants begin supplying electricity.