Moving away from reliance on Eskom’s rising electricity costs, City of Cape Town is set to become the first municipality in South Africa to procure electricity at scale from licensed energy traders and aggregators at below Eskom rates.
A new energy trader tender aims to procure 500 MW through Power Purchase Agreements (PPAs) spanning one to 10 years from a variety of power generation technologies, including solar.
According to the City, it spends approximately 70% of its tariff income to buy bulk energy from Eskom. “As by far the greatest input cost, it is vital to find means to reduce the impact of Eskom on electricity costs and subsequent consumer tariffs. This is the latest pioneering step we are taking to procure clean and affordable energy from the open market and to reduce our reliance on Eskom’s very expensive power,” says Mayco member for Energy, Xanthea Limberg.
“The City remains ahead of the curve, adapting to international best practices and South Africa’s transitioning energy landscape through a mix of inhouse solutions and greater private sector collaboration. This 500 MW tender is one of many novel interventions aligned to our landmark Energy Strategy, and implemented under the focused Mayoral Priority Programme.”
The tender also enables the City to participate in the South African Wholesale Electricity Market, as bidders may procure energy from SAWEM.
Limberg encourages Nersa-licenced energy traders and aggregators to submit their proposals under this tender as the City looks to accelerate power procurement in the open market at affordable prices.
‘The City of Cape Town is the first municipality to launch a procurement programme of this scale and ambition, increasingly positioning our City as an energy leader in the South African local government community. The tender also enables the City to participate in the South African Wholesale Electricity Market, as bidders may procure energy from SAWEM. We invite submissions to support our goals of reliable, affordable and carbon-neutral energy,’ says Limberg.
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Strict requirements govern tender process
Tender details stipulate that one or multiple bidders will be selected as part of a panel, where a secondary process will be followed for submission of financial offers by the panel, subject to operational requirements. Work order requests will be sent to the panel, and offers will be ranked from highest to lowest. Each PPA will be up to 10 years, with the first power delivery to be made no more than 36 months after the signing.
As part of the secondary process, bidders will provide prices lower than the equivalent Eskom Time-of-Use tariff which will include all relevant charges.
Only electricity traders registered with the National Energy Regulator of South Africa (Nersa), or bidders presently undergoing registration, shall be admitted to the panel to ensure regulatory compliance and safeguard both consumers and the City in perpetuity.
Furthermore, the tenderer may not procure energy or power from generating plants that the City has an exclusive or existing contract with which includes existing Small-Scale Embedded Generation plants currently feeding into the City network and remunerated at the existing City feed-in rates; or that is part of an existing tender process. Tenderers have until 13 May 2026 to respond.
