President Cyril Ramaphosa has announced the steps his government will take to ensure the end of load shedding in South Africa.
In a surprise address on Thursday afternoon (10 June), Ramaphosa said that this will include the amendment of schedule 2 of the Electricity Regulation Act to increase the NERSA licensing threshold for embedded generation projects from 1 MW to 100 MW.
“This intervention reflects our determination to take the necessary action to achieve energy security and reduce the impact of load shedding on businesses and households across the country,” he said.
“It is evidence of our intention to tackle this economic crisis head-on, by implementing major economic reforms that will transform our economy.”
Ramaphosa said that the amended regulations will exempt generation projects up to 100 MW in size from the NERSA licensing requirement, whether or not they are connected to the grid.
This will remove a significant obstacle to investment in embedded generation projects, he said.
“Generators will also be allowed to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with Eskom or the relevant municipality.”
However, generation projects will still need to obtain a grid connection permit to ensure that they meet all of the requirements for grid compliance, he said.
“This will ensure that we are able to bring online as much new capacity as possible without compromising the integrity or stability of our energy system.
“Generation projects will also need to have their registration approved by the regulator to verify that they have met these requirements and to receive authorisation to operate.”
Ramaphosa said that municipalities will have the discretion to approve grid connection applications in their networks, based on an assessment of the impact on their grid.
They will also have to undertake an Environmental Impact Assessment and all other requirements of existing legislation.
“This will ensure that while we enable as much new generation capacity as possible to come online, we also ensure the orderly development of the energy system,” Ramaphosa said.
“This reform is expected to unlock significant investment in new generation capacity in the short and medium-term, enabling companies to build their own generation facilities to supply their energy needs.
“This, in turn, will increase the available supply of energy and reduce the burden on Eskom, allowing Eskom to proceed with its intensive maintenance programme and reduce its reliance on expensive gas and diesel turbines.”
The change will be gazetted within the next 60 days, Ramaphosa said.
Worst crisis in recent history
South Africa is in the midst of its worst economic crisis in recent history, which has seen a dramatic increase in unemployment and hunger, and a significant decline in economic growth.
While the Covid-19 pandemic has played a part in this problem, Ramaphosa said that many of these problems have existed for a number of years.
He said that one of the key crises that needs to be addressed is the country’s energy supply shortfall, as no economy can really grow substantially without energy security.
Steps had been taken over the last months to help address the country’s energy issues, including the launch of a new bid window, he said.
He added that Eskom is working hard to address the problems at its power stations as well as its debt burden, and complete its restructuring process.
However, Ramaphosa said that these are not enough to address the immediate shortfall facing the country.