Changes to clear way for private energy producers due in days

The official publication of schedule 2 of the Electricity Regulation Act, which will enable private entities to generate up to 100MW of “distributed”, or self-generated, electricity without a licence is finally imminent and could be gazetted on Friday.

However, the department of mineral resources & energy did not respond to queries to confirm this. It is a week later than promised by President Cyril Ramaphosa, who said when he announced that the cap on licensing would be increased from the government’s initial 10MW proposal that the change would be gazetted within 60 days. That announcement was widely hailed as a clear signal that reforms to improve the economy’s competitiveness were gaining ground.

The exemption from licensing of electricity generation projects up to 100MW is viewed as a critical measure to bring more megawatts onto the national electricity grid to relieve SA’s energy constraint. Allowing embedded generation to thrive has been a central request from organised business to the government for at least the past three years. However, minister of mineral resources & energy Gwede Mantashe resisted raising the cap.

This week’s delay arose due to confusion over whether the National Energy Regulator of SA (Nersa) needed to conduct a fresh public participation process on the 100MW notice. Departmental officials and Nersa believed that another round of public participation hosted by Nersa was necessary before the amendment to the schedule could be finally published.

But this has now been clarified and Nersa, which conducted a public participation process on the first iteration of the schedule when the cap was 10MW, has said it now believes it does not have to repeat this process.

Nersa member Nhlanhla Gumede told Business Day on Wednesday that following the regulator’s engagement with Mantashe on Tuesday and after a careful review of the act, it was decided that more public hearings were not required.

“The minister is actually amending the existing schedule 2 and not determining a new schedule,” said Gumede.

While an amendment to schedule 2 does require a stakeholder consultation process, this had already been done.

The new schedule 2 is keenly awaited by business not only because it will accelerate the building of distributed generation by multiple producers but because it will also outline the rules around trading and wheeling of embedded energy. The extent to which producers will be able to move electricity around using the national grid and the costs for doing so are important factors for producers wishing to establish the business case for distributed generation.

Should the new schedule 2 amendments not include the ability to wheel and to trade, says business, then it is less likely that the change will significantly accelerate private investment, diversity and competition in the power sector to eliminate load-shedding.

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