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JOHANNESBURG - The National Energy Regulator of South Africa (Nersa) has edged closer towards regulation of on-site generation of electricity with the publication of rules for small-scale embedded generation.

The rules, for which Nersa is soliciting public comment, set out requirements for small-scale generators’ connection to the electricity distribution system. The requirements include an application for registration to Nersa and the description of the generation technology.

But energy consultant Ted Blom yesterday poured cold water on the rules, saying they were “draconian.”

Blom said, under the rules, owners and buyers of small-scale electricity generators less than 1MW should apply for the establishment of the installation to their local distributor - either Eskom or the local municipality.

“I view the rules as draconian, as they apply to all small installations, whether for private or public use and whether they are to be connected to the grid or not,” said Blom.

The Department of Energy last year issued a Government Gazette in which it said electricity generation facilities with an installed capacity of no more than 1MW did not need a generation licence provided that, among others, the facility supplied electricity to a single customer with no wheeling of that electricity through the national grid.

The exemption created an opportunity to develop small-scale power projects at “grass-roots” level that could benefit small towns and provide electricity at a decentralised level “where infrastructure challenges can impede the effective reticulation of electricity”, according to Lelo Mdhladhla of independent electricity trader PowerX.

Mdhladhla said the number of companies that own small-scale projects was on the rise and they were becoming a new wave of power generation in the rest of Africa.

AfriBusiness has also criticised the rules, describing them as Nersa’s ploy to create a database of private electricity producers which could be used to identify individuals who were living off the grid completely or partially, “which will allow Nersa or municipalities to levy fees for the operation of such systems.

“This is ironic, considering the fact that after the major load shedding suffered since 2008, certain consumers have heeded Eskom’s call for them to utilise less electricity. Now that they have heeded the call, there is an attempt to make an income off the dwindling electricity sales as more people and companies are going off grid,” said AfriBusiness.

AfriBusiness law and policy analyst Armand Greyling said Nersa’s regulation of private electricity production would hinder the private sector. “Private electricity production is not harming anyone, except those state-owned enterprises and local municipalities that are now bearing the brunt of their efforts to have South Africans use less electricity from local suppliers,” said Greyling.

- BUSINESS REPORT