CAPE TOWN, Monday 31 August 2026 — The Cape Town has signed its first two long-term power-purchase agreements with independent producers, securing 70MW of solar generation at prices the municipality says will initially be 19% to 21% below current Eskom rates as it moves to reduce the metro’s dependence on the national utility.
Mayor Geordin Hill-Lewis announced the agreements on Monday as the city moved from planning and procurement into signed contracts under its independent-power programme.
The two 20-year agreements cover a 30MW solar project operated by JEMPEC in Atlantis and a 40MW project by Make A Difference LLC in Philippi.
Together, the city expects to purchase approximately R8 billion of electricity over the life of the contracts.
Cape Town said electricity purchased under the agreements will initially cost between 19% and 21% less than comparable current Eskom rates.
Future price increases will be linked to the Consumer Price Index rather than Eskom’s tariff increases.
The municipality said the contracts require the electricity to remain below Eskom rates over the full 20-year period.
“Families cannot be expected to absorb endless Eskom price increases forever,” Hill-Lewis said in the city’s statement.
He said Cape Town intended to reduce its reliance on Eskom while securing more affordable electricity supplies.
The two contracts represent the first completed agreements under a competitive procurement programme through which the municipality intends to buy as much as 200MW from independent producers.
Further agreements are expected to be concluded in the coming months.
Cape Town’s longer-term target is to procure up to 700MW of independent electricity, according to the city.
The announcement is significant for municipal government because electricity procurement has traditionally been dominated by Eskom.
Cape Town describes itself as the first South African municipality to purchase electricity from independent producers on the open market.
That claim is the city’s and comes as national electricity reforms progressively open generation and trading to greater competition.
The agreements do not mean that 70MW of electricity has immediately entered Cape Town’s grid.
The projects must still complete the infrastructure, connection, testing and commissioning requirements necessary before commercial generation begins.
The city’s announcement did not provide confirmed commercial-operation dates for either project.
The 70MW figure also represents the combined generation capacity of the two solar plants rather than continuous electricity production.
Actual output will vary according to daylight, weather and plant availability.
Cape Town will therefore continue relying on Eskom and other electricity sources even as independent generation expands.
The deals form part of a wider municipal energy strategy that includes power wheeling, purchases from independent producers, municipal generation and allowing households and businesses to sell excess rooftop-solar electricity into the municipal grid.
Cape Town has also completed its own 7MW solar facility with 10MWh of battery storage in Atlantis.
The municipality says residents and businesses have received approximately R67 million in payments and municipal credits for excess electricity sold to the city since June 2024.
Mayoral Committee Member for Energy Xanthea Limberg said the two new agreements were expected to avoid nearly two million tonnes of carbon emissions over their operating lives.
The city expects carbon credits generated by the projects to be tradeable, with proceeds potentially directed towards additional infrastructure investment.
The agreements also come at a significant moment for Eskom.
The utility reported a R30.3 billion profit after tax for the financial year ended March 2026 on Monday, more than double its restated R14 billion profit in the previous year.
At the same time, Eskom’s electricity sales declined by 6.2%, partly as industrial customers and other consumers increasingly generated or sourced their own electricity.
Eskom has identified declining sales and municipal debt as major financial risks as South Africa moves towards a more competitive electricity market.
Municipal arrears owed to Eskom reached R111.6 billion by the end of March.
The emergence of municipalities capable of purchasing cheaper electricity elsewhere consequently creates both competition for Eskom and potential pressure on its traditional municipal sales model.
The Cape Town agreements also carry political significance ahead of the 4 November local government elections.
Electricity procurement, infrastructure investment and the comparative performance of metropolitan municipalities have become central themes in the campaign of the Democratic Alliance, which governs Cape Town.
Hill-Lewis and the DA have repeatedly presented Cape Town’s efforts to reduce dependence on Eskom as evidence of the party’s approach to municipal government.
The ANC and other opposition parties contest that broader assessment of the city’s performance, particularly on inequality and the distribution of municipal services.
The signed agreements nevertheless provide the DA administration with a concrete infrastructure and procurement milestone shortly before voters decide whether to return it to office.
Their longer-term significance will depend on whether the solar plants are completed on schedule and whether the promised savings are ultimately reflected in Cape Town’s electricity costs.
Because the contracts run for 20 years, they will also bind future municipal administrations regardless of which party controls Cape Town.
That makes transparency around actual generation, contract performance and price comparisons with Eskom important beyond the current election campaign.
The next milestone will be the conclusion of additional agreements under Cape Town’s 200MW procurement programme.
Once the Atlantis and Philippi projects begin commercial operation, actual electricity delivered and prices paid will provide the first test of whether Cape Town’s move into long-term independent power procurement produces the savings the municipality has projected.
