Eskom Holdings reports that it has now secured the required approvals to establish Eskom Green as a wholly-owned renewables subsidiary that is able to raise funding and enter into public-private partnerships.

The approvals were made in terms of Section 54(2) of the Public Finance Management Act (PFMA), alongside the applicable conditions of the Eskom Debt Relief Act, which placed restrictions on the raising of new debt for generation investments.

“Eskom Green can now crowd-in external capital and expertise and [the approval] enables private sector investors to be able to partner and invest with Eskom Green and utilise our experience and skills to deliver very compelling and competitive utility-scale renewable energy supply offerings to customers,” Eskom renewables group executive Rivoningo Mnisi said in a statement.

Eskom Green will now initiate a market process to establish a panel of strategic partners to support the delivery of renewable-energy projects through project-financed special purpose vehicles (SPVs) and strategic partnerships.

It has appointed PwC and the Development Bank of Southern Africa to advise it on the process.

The SPV-based funding model would ensure that project-specific debt, liabilities and risks were ring-fenced.

“Eskom Green’s financial exposure to individual projects is therefore limited to its committed equity contributions, with limited recourse to Eskom Holding’s balance sheet or the national fiscus.

“Where government support mechanisms are required to enhance bankability, such support is expected to be targeted, capped and subject to the necessary PFMA and shareholder approvals,” the statement added.

Eskom Green’s mandate included the repowering and repurposing of coal-fired power station sites, and it announced at its launch in June that it was aiming to implement 5.6 GW of renewables by 2030 across 17 projects.

It had a larger goal of implementing 32 GW by 2040 and indicated previously that battery energy storage systems could be integrated into several projects. In addition, it aims to pursue the 1.5 GW Tubatse pumped-storage project in partnership with the private sector.

“The 2025 Integrated Resource Plan states that 102 GW of renewable energy should be delivered by 2042, in line with this, Eskom Green is targeting to deliver up to 32 GW by 2040, which still leaves over two-thirds of the renewable energy generation opportunities open to the private sector,” Eskom Holding CEO Dan Marokane said.

Marokane also described the approvals as an important milestone in the further implementation of Eskom's strategy in the areas of unbundling, delivering utility-scale renewable-energy capacity and reducing carbon emissions and other air pollutants.

Eskom Green also stressed that all its activities would be undertaken in compliance with South Africa’s energy regulatory framework.

This, amid ongoing concern that Eskom Green might not be subjected to the same grid-access rules that independent power producers are facing as they compete for limited grid capacity.

These concerns were raised when Eskom announced in May that construction had started on a 75 MW solar PV project alongside the Lethabo coal-fired power station, in the Free State.

Eskom is funding the R1.2-billion project off its own balance sheet and the Letsatsi JV has been appointed as the engineering, procurement and construction partner.

Mnisi said prevailing grid-access rules had applied and stressed that Eskom Green would receive no preferential treatment from Eskom’s Grid Access Unit.