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George Municipality to partner with Independent Power Producers for future energy security

The photo above is for illustration purposes only.

George Municipality is pressing ahead with plans to purchase electricity from Independent Power Producers (IPPs) as part of its strategy to secure more cost-effective power for the city. While the arrangement will not shield residents from load shedding it does open the door to competitive pricing that could help keep municipal finances more sustainable in the long run. Thus, electricity will be sourced from alternative producers rather than solely from Eskom. This decision comes as Eskom continues with tariff increases that have risen faster than inflation.

By diversifying electricity supply and working with multiple producers – particularly those using renewable sources – the Municipality aims to reduce the risks of depending on a single supplier and to improve long-term cost stability.

“Partnering with IPPs will support renewable energy targets and limit the operational and maintenance burden on the Municipality, as the private sector will manage its own electricity generation plants,” said Michael Rhode, Director of Electrical Engineering Services. “This is a key step in ensuring George has a resilient energy future.”

 Two tracks: short-term and long-term agreements

The Municipality is pursuing two types of Power Purchase Agreements (PPAs) at the same time:

  • Short-term PPA (three years) – Expected to deliver in the order of 10 megawatts (MW) of capacity, likely from a solar PV facility. A typical 10 MW plant could produce over 10 million kilowatt-hours each year. These agreements have fewer legislative requirements and can be implemented in a shorter timeframe as longer term PPA’s.
  • Long-term PPA (20 years) – Larger scale PPA in the order of 20 MW as a first phase. Additional contracts may follow in future. This process involves more legislative steps and is expected to take about two years from procurement to signing of the PPA.

George Municipality is assisted by a Transactional advisory team, which was appointed by the Western Cape Government to achieve its goals.

The short-term PPA tender is currently with the Municipality’s Supply Chain Management unit and is expected to be advertised during September 2025. The long-term PPA’s Supply chain process is scheduled to begin in October 2025, with the contracts and PPA expected to be finalised before June 2027 if timelines are met. Once the PPA is signed, the IPP will be responsible for the supply of energy as per the contract.

All environmental approvals, construction and ongoing plant management, which include all operations and maintenance will be the responsibility of the IPP. The Municipality will pay only for the electricity supplied, with risks such as financing, construction and performance carried by the IPP.

Benefits for George

Although final pricing will only be confirmed after the tender process, the Municipality expects competitive and more predictable tariffs compared with current Eskom rates. Any major IPP agreement will be followed by a cost-of-supply study, which may lead to a review of George Municipality’s electricity tariffs.

“This approach is not just about today’s costs,” Rhode said. “It’s about creating a cost-effective electricity supply that benefits residents and businesses for decades to come.”

In addition to potential cost-effective electricity, the move supports national climate and renewable energy goals whilst also creating a more sustainable environment for economic growth.