President Cyril Ramaphosa announced on Thursday 10 June that he has authorised that a series of amendments be made to the Electricity Regulation Act in order to allow independent power producers (IPPs) to augment the electricity supply to the national grid. This, he hopes, will ease pressure on embattled power producer Eskom, who’s well-documented woes have led to the implementation of an intense period of Stage 2-4 load shedding over the past few weeks.
The Western Cape provincial government has welcomed the decision, saying that the changes to the Electricity Act need to be made urgently so that the electricity crisis SA finds itself in can finally begin to move towards some form of resolution
Ramaphosa approves Electricity Act amendments
Speaking during a briefing on Thursday Ramaphosa said that government will amend Schedule Two of the Electricity Regulation Act in order to remove restrictions currently blocking a plethora of IPPs from helping alleviate South Africa’s electricity crisis. This will be done by raising the current exemption threshold from 1 megawatt to 100 megawatts, allowing IPPs to produce power without going through a long drawn-out process with the energy regulator NERSA.
“Generators will also be allowed to wheel electricity through the grid subject to wheeling charges and connection agreements with Eskom and relevant municipalities,” Ramaphosa said.
In recent weeks, Eskom has struggled immensely to fulfil their mandate of supplying the nation with power, blaming continual breakdowns at several South Africa’s major power stations, cable theft and high demand during the colder winter months for the current need to implement load shedding on an increasingly frequent basis.
Eskom is currently implementing Stage 3 load shedding, which is set to continue for the remainder of the week while the national grid remains “under severe pressure”.
Load shedding costing SA immensely
The impact of these load shedding on the South African economy is immense, and Ramaphosa admitted on Thursday that urgent reform needs to take place to allow IPPs to offer their services to the embattled state power producer, who he added will remain responsible for supplying SA with most of its desperately needed electricity.
“We are in the midst of the worst economic crisis in our country’s recent history,” he said. “Eleven preferred bidders have been approved as part of the emergency power procurement programme, which will together deliver nearly 2 000 MW of power to the grid over the next 18-months.”
The proposed changes to the Act will allow independent power producers to generate up to 100MW of electricity without having to obtain a license from the NERSA, and they will additionally be allowed to sell excess power back into the national grid
“This will ensure that we’re able to bring online as much new capacity as possible without compromising the integrity and stability of our energy system,” said Ramaphosa, who added that generation projects will still need to obtain permits, a grid connection permit, to ensure that they meet all the requirements for grid compliance.
Western Cape government welcomes decision
Western Cape Minister of Finance and Economic Opportunities, David Maynier, said in a statement shortly after the briefing that the announcement is welcomed, and said that the changes must be done post-haste.
“With load shedding costing South Africa’s economy R500 million per stage, per day, and the Western Cape’s economy R75 million per stage, per day, over the last two weeks load shedding has cost the South African economy approximately R25 billion, and the Western Cape approximately R3.85 billion,” he said.
“We now need to urgently finalise Schedule 2 of the Electricity Regulation Act and clarify which categories of projects are covered by the relaxation and ensure that the permitting and registration requirements do not become another regulatory spiderweb causing unnecessary delays in the delivery of additional energy supply in South Africa.”
Maynier warned that SA remains in an energy crisis and said that “large-scale private sector participation in energy generation, in partnership with government, will be key to addressing the current shortfall in the Western Cape”.
“And so, this is a positive move that will give much-needed certainty to investors and increase access to affordable, renewable energy in South Africa,” he said.