Mediclinic to explore the private power cure as independent energy market opens up

Suddenly there’s plenty of action in the independent energy producer sector in South Africa.
In the clearest indication yet that a private energy market is developing in South Africa, independent brand Earth & Wire has signed its first power purchase agreement (PPA) with the Remgro-owned energy trader Energy Exchange of Southern Africa.
The 12-year agreement will see Earth & Wire supply 5MW of solar energy to Mediclinic and two other private customers.
The power will be generated from the SlimSun Too photovoltaic project near Malmesbury in the Western Cape and delivered to the customers via the national grid. The generation facility and the three offtakers are all connected to the Eskom grid.
Energy Exchange, like Cape Town-based Enpower Trading, is licensed to facilitate the transfer of energy between those who produce it and those who consume it.
The deal is for 12 years and not 20 years, which is the length of agreements typically signed by participants in the Independent Power Producer Procurement Programme.
“Our offtakers didn’t want such a long-term agreement; it becomes a contingent liability on their balance sheet which is a challenge for smaller companies,” says Tommy Garner, the head of business development at Earth & Wire.
As generator of the power, Earth & Wire is satisfied with this. The market can change a lot in 20 years and power users don’t want to be locked into an expensive PPA, he says. Equally, “we believe prices and demand are going up, not down, so we do not see the shorter time frame as excessively risky”.
Unlike with the PPA signed in 2021 between Amazon Web Services and power developer SOLA, Earth & Wire is supplying its power to an energy exchange, which in turn is supplying three customers.
“This is more complex, but it indicates that the market is opening up,” says Garner. “This heralds the beginning of a new era of private electricity agreements; there is an important role in all of this for the traders.”
When asked about the agreed tariff, he answers in a roundabout way: “The ongoing conversation around price in the South African power sector is missing the point. Given the severe availability problems that we face, customers are searching for an alternative, clean energy source that comes with certainty.
“Our tariffs are modelled on realistic predictions that include critical factors like fluctuating exchange rates, inflation and realistic interest rates. Our customers are very comfortable with the tariff we’ve agreed,” he says.
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