The City of Cape Town's IPP programme for "embedded generation" buys electricity from privately owned plants connected to its own network. It does this through long-term power purchase agreements (PPAs). Earlier tender documents for the programme show a 20-year term from the date of generation and a minimum of 5 MW of peak AC output per bid. In a bidder briefing, the City said it offers no guarantees, and that the budget is provided because the City would be paying Eskom anyway. The City has run similar procurements for other technologies. One example is a separate waste-to-energy tender, which requires pricing below Eskom's equivalent tariff and emissions below Eskom's grid emissions factor.
After the August 2026 council meeting, media reported that the council authorised the municipal manager to sign a R5.1 billion, 20-year contract with an IPP company. The contract is with Make A Difference Ventures. The City's electricity bulk purchase account will fund it. The City's report says inflation under the contract is linked to the consumer price index, not to Eskom's unpredictable increases. It also says consumers may benefit through lower tariffs and slower tariff increases, with City savings over 20 years estimated at R1.7 billion. The public participation process drew submissions from one member of the public and from National Treasury, which asked about compliance issues. Reports say the contract was adopted despite objections from the ANC, GOOD, the National Coloured Congress, the Patriotic Alliance and the PAC.
This matters because Eskom tariff increases have put heavy pressure on household and municipal budgets. A 20-year commitment locks in a supplier and a price path for two decades. Whether it delivers the projected savings will depend on how the contract performs and on future Eskom tariffs.
