Eskom has received the approvals required to establish Eskom Green as a wholly owned subsidiary, allowing the renewable energy business to raise external funding and develop utility-scale projects.
The approvals were obtained under Section 54(2) of the Public Finance Management Act, read with the applicable conditions of the Eskom Debt Relief Act, the utility said.
The utility said the final steps needed to establish the subsidiary are underway but did not provide an implementation timetable or expected operational date.
Eskom Green is targeting up to 32 GW of renewable energy capacity by 2040. Eskom contrasted this with the 102 GW of renewable capacity envisaged by 2042 in the 2025 Integrated Resource Plan.
“This is 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,” said Eskom Group Chief Executive Dan Marokane.
Projects will be developed through special purpose vehicles and strategic partnerships with project-specific debt, liabilities and risks ring-fenced, according to Eskom. The subsidiary’s exposure to individual projects is intended to be limited to its committed equity contribution with limited recourse to Eskom Holdings’ balance sheet or the national fiscus.
Any government support required to improve project bankability is expected to be targeted, capped and subject to the necessary Public Finance Management Act and shareholder approvals, Eskom said.
“Eskom Green can now crowd in external capital and expertise and enables private-sector investors to partner and invest with Eskom Green,” said Eskom Renewables Group Executive Rivoningo Mnisi.
The funding model will rely on long-term electricity offtake agreements to provide predictable project cash flows. Eskom Green will offer renewable energy solutions to large power users seeking to reduce the emissions associated with their electricity consumption.
A market process is planned to establish a panel of strategic partners to support renewable energy projects and associated customer offerings. Eskom did not disclose when the process will begin or how the partners will be selected.
The subsidiary’s mandate will include developing, financing and operating renewable energy projects, including projects linked to the repowering and repurposing of coal-fired power station sites. It will not undertake policy-making, regulatory or electricity-market operation functions, Eskom said.
