CAPE TOWN, Aug 27 (Reuters) - South African private

power producers are seeking compensation for revenues lost when

adhering to requests from state utility Eskom to limit

electricity supply to the national grid, industry executives

said.

Eskom has submitted a proposal to the country's energy

regulator to introduce a mechanism to compensate independent

power producers (IPPs) for lost revenue resulting from

curtailment rates of up to 10%.

The curtailment requests are due to a shortage of pylons and

high voltage power lines that have caused choke points in

Eskom's transmission system.

The compensation mechanism is one of several proposed

regulatory reforms as efforts to open up Africa's largest

electricity market gather pace.

"We are hoping that there will be adequate compensation for

generation that is curtailed," Ian Burger, a technical director

at private power developer SOLA Group, told Reuters.

Burger said SOLA Group's two Lichtenburg solar PV plants,

which each produce just over 100 megawatts (MW), were requested

in April and May by Eskom to cut output by up to 80% and produce

only 20 MW per day.

SOLA Group supplies power to miner Tronox ( TROX ).

Eskom studies indicate that the costs of curtailing

renewable energy are significantly lower than the billions of

dollars required for upgrading the network to connect the same

amount of renewable power to the grid.

By reducing generation from independent producers, Eskom

hopes to immediately free up an estimated 3,470 MW of additional

capacity on the constrained grid.

In July, energy regulator Nersa released a draft curtailment

congestion policy based on Eskom's application seeking approval

to classify it as a "constrained ancillary generation service".

This would enable Eskom to use specific formulae to

reimburse renewable energy plants for the power curtailed

because of grid congestion.

"The devil still is in the detail, but this raises the

possibility of further minimising the cost borne by consumers by

curtailing those IPPs with the lowest tariffs first, as opposed

to everyone equally," said Kilian Hagemann, CEO of G7 Renewable

Energies.

Over the past five months, Eskom has provided continuous

electricity, a feat last achieved in 2020, reducing its reliance

on renewable energy to bolster the grid.

Eskom expects congestion curtailment to be implemented

routinely from 2026 onwards, with curtailment levels increasing

as more renewable projects come online.