Government weighing up private electricity generation in South Africa: Treasury

The shortage of electricity is the single biggest threat to South Africa’s economic recovery, apart from Covid-19, says deputy finance minister David Masondo.

Presenting his departmental budget speech on Thursday (20 May), Masondo said that Treasury is engaging with the relevant departments regarding further measures which could be taken to bring more power into the system as quickly as possible.

He added that the recent measures undertaken by government to bring additional energy into the system, include:

  • The recent gazetting for public comment of a draft amended Schedule 2 to the Electricity Regulation Act;
  • Raising the licensing threshold for embedded generation from 1 MegaWatt to 10 MegaWatts.

“Research indicates that the current requirement for a NERSA license for plant larger than 1 MW is a deterrent to investment because the licensing process is too complex, lengthy, and expensive for these relatively small investments,” said Masondo.

“The licensing process cannot be simplified or streamlined quickly because most of its steps are required by legislation.”

He added that there has been some policy discussions and debates regarding energy reform within government, with the benefits of increasing the available supply of power by allowing the private sector to invest more freely in its own generation being weighed against concerns about the impact of the reform on municipal finances.

Masondo said that there are also concerns around the stability of municipal distribution networks and the readiness of Eskom and municipalities to manage a large number of new connections of small generators.

“Operation Vulindlela has been working to resolve this policy discussion and I believe we are close to a resolution,” he said.

Winter load shedding 

This week Eskom warned of increased demand peaks, and a higher chance of ongoing load shedding during the evening peak period (17h00 to 22h00) throughout the winter.

The power utility implemented stage 2 load-shedding on Sunday evening because of 10 unit breakdowns at seven power stations.

The breakdowns included three generation units at Tutuka, one unit at Majuba, one unit at Kriel, and one unit at the Matla power station.

There were also trips at a unit each at Medupi, Kusile, and the Duvha power stations.

South Africa was hit by the worst year of load shedding on record in 2020. Data published by the Council for Scientific and Industrial Research (CSIR) in March shows that 2020 saw 859 hours of load shedding.

The most intensive load shedding was seen before the Covid-19 lockdown, which accounted for 63% of all load shedding seen in 2020. Most of this was stage 2 load shedding, the research body said.

Read: Cape Town wants to leave Eskom and load shedding behind – but needs government to speed things up

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Government weighing up private electricity generation in South Africa: Treasury