en.Wedoany.com Reported - Eskom Green has been officially established, planning to collaborate with private investors to implement the first 2 GW of advanced utility-scale renewable energy projects on land adjacent to the state-owned power utility's coal-fired power stations.

The company is simultaneously advancing several smaller balance-sheet projects with a total installed capacity of 500 MW, funded by capital set aside in the group's corporate plan.

Rivoningo Mnisi, Executive President of Renewable Energy at Eskom Group, told Engineering News that approximately ZAR 10 billion has been allocated to Eskom Green over the next five years. Part of these funds will be used for initial projects without private partners, including a 75 MW solar photovoltaic project recently started construction next to the Lethabo power station in the Free State province. Eskom is funding this ZAR 1.2 billion project and has appointed Letsati JV as the engineering, procurement, and construction partner.

Mnisi described the Lethabo PV project, along with projects on land near Eskom's Arnot, Duvha, Komati, Majuba, and Tutuka power stations, as well as the Sere wind farm project, as smaller "skills transfer and skills development" projects. The next project expected to enter the execution phase will be located at the decommissioned Komati site and may include battery energy storage.

Since 2023, Eskom has been trading with support from taxpayers through a ZAR 230 billion debt relief program, which prevents the company from investing in new power generation projects. However, Mnisi stated that Eskom has obtained all necessary authorizations to advance initial development, including from the National Treasury. "Funding for the initial phase has been set aside within Eskom's approved capital expenditure plan and is expected to be supported through balance sheet financing, in compliance with National Treasury debt relief conditions, without relying on additional project finance borrowing."

For the larger 2 GW pipeline and additional renewable energy and storage projects, including the 1.5 GW Tubatse pumped storage project, a private sector participation model is planned. Eskom Green aims to build 5.6 GW of renewable energy through 17 projects by 2030, with a vision of reaching 32 GW by 2040, and stated that battery energy storage systems can be integrated into multiple projects. Mnisi reported that, under Section 51G of the Public Finance Management Act, private participation has been stipulated as a condition for establishing Eskom Green as an independent subsidiary of Eskom Holdings.

The entity will have its own board of directors, collaborate with private equity partners through special purpose vehicles (SPVs), apply project finance principles, and have limited recourse to Eskom's still fragile balance sheet. Eskom Green is preparing to launch a pre-qualification process in the near future to begin selecting private equity partners and has appointed PwC and the Development Bank of Southern Africa to advise on the process. The SPV needs to secure offtakers, grid access, and all other necessary regulatory and environmental approvals to advance projects to financial close, while Eskom Green contributes the land.

Mnisi emphasized that Eskom Green will adhere to the same grid access rules as independent power producers competing for limited grid capacity. "We follow the same grid rules... I cannot interact with the grid access department, and there are strict internal firewalls. For projects we intend to bring to market, the team has applied for and followed the necessary due process."

Mnisi stated that the entity's equity stake in projects will remain flexible and confirmed that it will also seek concessional funding under the Just Energy Transition Partnership. Initially, the SPV may target bilateral power purchase agreements with large mining or industrial customers seeking to decarbonize their electricity supply, but Mnisi expressed openness to various models, including collaboration with licensed electricity traders.

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