Cape Town pleased municipalities will be able to buy from IPPs - but it's still heading to court

The City of Cape Town has welcomed President Cyril Ramaphosa's announcement that some municipalities would be able to buy energy from independent power producers in future, but Executive Mayor Dan Plato wants to know exactly how this will be implemented.

Further questions have come from Western Cape Premier Alan Winde, who wants to know whether – having procured the energy – municipalities will be able to sell it.

During his State of the Nation Address on Thursday, President Cyril Ramaphosa said that municipalities in good standing would be allowed to procure their own power from IPPs. This has been a long-running demand from some municipalities, including Cape Town, who say they will be able to reduce or eliminate load shedding if they can buy electricity from independent producers.

Cape Town Mayor Dan Plato said he "cautiously welcomed" the announcement.

Winde, meanwhile, said the provincial government had for several years called for many of the energy reforms announced by Ramaphosa in his SONA on Thursday evening.

Talk to action

"While we are pleased to see announcements on these, we hope to see more detail come out of the budget process on exactly how these will be implemented.

"Many of these are projects which we have been talking about for some time in South Africa and it is now time to move from talk to action," said Winde.

He added that questions which remain include whether municipalities would be able to sell the power they procure from IPPs, for example.

More renewables

From the supply side, the City would consider all available options, but look more to renewable energy technologies that support a transition to a lower carbon future. It also intends to look at demand side management options such as ripple control, standby power supply and solar water heating.

In Plato's view, this is "the firmest commitment to date given by Ramaphosa".

Plato said the City of Cape Town is a municipality in good standing and it is, therefore, preparing to buy energy from IPPs in the future.

"The City of Cape Town has been putting pressure on national government for many years to reshape the energy regime in South Africa to the benefit of our people and businesses. We have contended that it is the City’s constitutional mandate to provide power to its customers, allowing those customers to choose the type of power they receive," he said on Friday.

Court action

The City of Cape Town has already taken government to court for the right to procure more power from IPPs and make itself less dependent on Eskom.

The court case is set down to be heard in May 2020. The City is asking for clarity on the legal responsibilities and parameters required for municipalities to be able to procure from IPPs.

A spokesperson told Fin24 on Friday that the City intends to continue with the court case, regardless of Ramaphosa's recent SONA statements. This is because the City believes there are issues relating to legislation which need to be ruled on and clarity must still be obtained.  

The City of Cape Town added that it is completing its own Integrated Resource Plan on how to best optimise supply and demand options.

It is working with the Council for Scientific and Industrial Research on the production of such an IRP. It is also working with the Western Cape Government and GreenCape to look at options to contribute to energy security of supply and ensure a transition to a lower carbon future, it said. Discussions with National Treasury are also underway. 

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