Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom

Overview of Multi-Year Price Determination
2013/14–2017/18 (MYPD 3)
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costs – especially those from renewable energies – are considerably higher than the cost of
Eskom-generated electricity, totalling R78 billion (an average of 212c/kWh) for the MYPD 3
period.
The energy bought from IPPs is blended with Eskom generation costs and then sold to
Eskom‟s customers at their normal tariff. IPP costs are recovered as a pass-through
according to the Nersa-approved formula.
Stability and sustainability of the electricity industry would encourage international and
domestic investment in IPPs. Higher levels of investment in IPPs would likely result in a
lower cost of IPP-generated electricity as economies of scale are obtained over the longer
term.
Figure 5 shows the IPP performance in MYPD 2 and the projected figures for MYPD 3. For
the purposes of this submission, Eskom has included the costs related to:
The DoE‟s peaking project (1020MW)
The MTPPP (373MW)
The three rounds of the DoE‟s renewable energy IPP programme, totalling
3 725MW of capacity.
Figure 5: IPP performance in MYPD 2 and forecast for MYPD 3 (R million)