Cape Town seals first agreements to buy power at below Eskom rates

The City of Cape Town has signed two 20-year power agreements to purchase 70MW of electricity from independent solar producers Jempec Energy and Make a Difference for below Eskom rates, valued at approximately R8 billion. Mayor Geordin Hill-Lewis announced the deals, which will inject 19-21% savings in power purchases compared to Eskom.

Hill-Lewis emphasized reducing the city's reliance on expensive Eskom power to make electricity more affordable for residents. Cape Town has prioritized securing electricity from alternative sources, as it is the city's largest input cost. The agreements ensure price increases will be linked to the Consumer Price Index (CPI) rather than Eskom's unpredictable hikes over the next 20 years.

Eskom's tariffs have increased by almost 15% annually since 2008, compared to an average CPI inflation of about 5.8% during the same period. A declining sales trend poses a significant risk to Eskom's financial stability, as it competes with private sector entities and faces large municipal debts. Cape Town, the first city in South Africa to buy power on the open market, aims to diversify its electricity sources and generate revenue from surplus energy sales.