Major headache for private power producers in South Africa
Eskom’s new rules on allocating connections to the national transmission grid will impose greater costs on developers of new generation plants and their customers, according to the South African Independent Power Producers Association.
The state-owned utility last week revised the protocol for developers to acquire connections to the grid after projects were sidelined because of a lack of access, reported Bloomberg.
According to Eskom, it has developed guidelines to allocate access to the country’s electricity grid, prioritising projects that are ready for development.
While South Africa is in need of generation capacity to end record power outages, projects have been sidelined due to a shortage of connections to the grid.
The utility has drafted rules designed to grant equal access to stations “based on a demonstrated readiness,” according to Eskom officials.
The practice of “grid-capacity hogging” presents a challenge, the utility said in a presentation on its Interim Grid Capacity Allocation rules. “All grid connection applications shall be treated in a non-discriminatory manner to ensure a fair, transparent, equitable, open access.”
To obtain a grid connection, developers are now required to fulfil several additional prerequisites as per the latest regulations. These prerequisites include environmental and water usage rights, a signed power purchase agreement, and a minimum of one year’s data on the availability of sun or two years on the availability of wind.
However, the new rules will increase the amount of money that developers must spend before they know whether they have access to the grid, Brian Day, chairman of SAIPPA, said in an interview Monday on Johannesburg-based broadcaster 702.
A better solution that enables the connection of more projects is needed, Day said.
South Africa depends on private investors to address load shedding through new power projects. However, the high cost associated with Eskom’s new regulations presents a significant risk. Consequently, experts predict that investors are likely to bypass the power utility and invest in other nations.
On a positive note, the electricity minister, Kgosientsho Ramokgopa, said generation is recovering.
South Africa’s power generation system is improving, and that’s been reflected in fewer power cuts, according to the minister of electricity.
It’s “no accident” that the country has seen a recent reduction in so-called load shedding, as South Africa has boosted generation to more than 29,900 megawatts, with demand at about 30,000 megawatts, Ramokgopa told reporters in Pretoria, the capital, on Sunday.
Read: It’s too late for 2023 – Reserve Bank shifts load shedding hopes to next year
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