Minister for Natural Resources and Energy Gwede Mantashe yesterday gazetted the amendments to Schedule 2 of the Electricity Act, lifting the generation threshhold for private companies to generate up to 100 megawatts (MW) of electricity. Photo: File
Minister for Natural Resources and Energy Gwede Mantashe yesterday gazetted the amendments to Schedule 2 of the Electricity Act, lifting the generation threshhold for private companies to generate up to 100 megawatts (MW) of electricity. Photo: File

100MW licences to start flowing as Mantashe gazettes amendments

By Banele Ginindza Time of article published Aug 13, 2021

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MINISTER for Natural Resources and Energy Gwede Mantashe yesterday gazetted the amendments to Schedule 2 of the Electricity Act, lifting the generation threshhold for private companies to generate up to 100 megawatts (MW) of electricity for their own use and sell excess energy to the grid, leaving the door open for the National Energy Regulator of South Africa (Nersa) to consider applications.

The move comes a little past the 60-day deadline announced by President Cyril Ramaphosa in early June, lifting the threshold from 10MW to a 100MW at the height of loadshedding, which saw industry lose out production hours due to disruptive power supply from troubled parastatal Eskom. The higher threshold will allow mining companies, in particular, and big industry to use their own systems for more stable power supply.

Business has hailed the move, saying it was an example of pragmatism by the President to ensure private companies could themselves generate 100MW of electricity without needing a licence.

Business Leadership South Africa’s chief executive Busi Mavuso, said earlier this month: “This move alone opens the way for much investment as mines and industrial companies in particular can operate plants and develop new ones without having to rely on an unreliable state-owned power utility in Eskom. We believe that as much as 15GW could enter the grid over the next five to seven years with the medium-term investment amounting to around R100bn.”

The guidelines released under gazette yesterday effectively spell out the various requirements for licensing and set out capacity and restraints, which would govern industry’s participation in power generation.

Nivesh Govender, the chief operating officer of the solar PV industry body the SA Photovoltaic Industry Association (Sapvia), said yesterday: “The President and the Minister for Mineral Resources and Energy have recognised and responded with boldness to ensure we act with appropriate haste and use the opportunity to rebuild our economy.“

“These changes will in fact impact several generation technologies with the capability of distributed generation, many private sector commercial and industrial businesses who so desperately need access to a constant supply of energy, foster much needed investment into the energy infrastructure and alleviate the continuously building pressure on our national utility, Eskom,” said Govender.

Sapvia said there were several positive changes in line with industry’s call for regulatory reform such as the increase of the licence exemption threshold and for the first time wheeling being specifically mentioned and considered as its own principle.

The schedule also removed reference to the “single customer” and focused on “an end user customer”, which could allow for interpretation from a singular to multiple, while third party generation had been recognised with regards to a legal entity that might be an embedded generator who may contract with a distributor and then apply wheeling.

But Govender said the amendments had missed providing comprehensive definitions, creating unnecessary ambiguity, and raised more questions of clarity around self-generation, the application of wheeling and trading as well as how including energy storage to generation projects would impact the requirements.

“Is this perhaps a missed opportunity to implement a fresh Schedule 2 that would last in perpetuity, rather than requiring revision biannually as was the case in recent year?” he said.

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