SOLA signs land lease agreement with Eskom for renewable energy development

We have concluded land lease agreements with power utility Eskom, to develop some of its underutilized land in Mpumalanga. SOLA Group will use this land to develop two large renewable energy projects, with a combined generating capacity of approximately 345MW. We intend to conclude corporate PPAs with wheeling with either existing SOLA clients or new off-takers in the market.

Eskom issued a request for proposals in April 2022, which was followed by a meticulous selection process. At the end of the process, we were one of the four awarded bidders. The bidders will collectively lease over 6,000 hectares of land for a period of between 25 and 30 years each. 100% South African owned SOLA has been awarded land parcels alongside major international companies and a large green hydrogen company.

The key objective of this Eskom initiative is to provide relief to the constrained electricity system as quickly as possible. There is a dire need to alleviate pressure on the system by adding as many megawatts as possible in the shortest possible time, thus increasing Eskom’s ability to conduct maintenance at its existing fleet, reducing load shedding and the usage of expensive open cycle gas turbines.

Our projects will be developed rapidly in order to meet Eskom’s timelines and contribute to resolving the energy crisis as timely as possible. We already have a strong footprint of large-scale renewable energy projects in most provinces, but these will be our first utility-scale projects in Mpumalanga.

SOLA has already completed several smaller projects for commercial and industrial clients in that Province, but we are excited to expand the scale of our operations in the province and continue our role in the Just Transition in Mpumalanga. This region is set to become a focus for renewable energy activity due to grid connection availability in other provinces becoming constrained. As Eskom coal-fired power stations come offline at the end of their usable
lifetimes, grid capacity will be available for cleaner renewable energy projects, and Mpumalanga is preparing to become a focal point for re-skilling and training of resources for renewable energy projects as South Africa fast-tracks its movement towards clean energy.

Eskom plans to make more land available around its power stations where there is sufficient grid capacity to connect clean energy producers. This is the first batch of lease agreements to be signed with private companies.

It is expected that the generators will be connected to the grid in 3-4 years, subject to environmental and other regulatory approvals.

Schedule 2 of the Electricity Regulation Act of 2006, as gazetted by the Department of Mineral Resources and Energy in August 2021, permits independent power generators to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with the relevant transmission or distribution license holders. The lifting (and expected removal) of the NERSA generation license cap has allowed SOLA to take other similar large wheeling projects to Financial Close very quickly, and we plan to also advance these projects as fast as possible.