The government has raised the licensing threshold for embedded power generation in South Africa from 1MW to 100MW, President Cyril Ramaphosa announced in a media briefing on Thursday (10 June).
Ramaphosa said this decision is part of government’s economic recovery efforts and has been taken in response the ongoing load shedding crisis.
“Following an extensive public consultation and a significant amount of technical work undertaken by the Department of Mineral Resources and Energy, we will be amending Schedule 2 of the Electricity Regulation Act to increase the NERSA licensing threshold for embedded generation projects from 1 MW to 100 MW,” the President said.
“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.”
“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 the government will publish the final schedule reflecting the changes within 60 days, adding that he hoped project initiators would afterwards move quickly to start producing power.
Grid connection permits
However, those intending to produce their own electricity will still need to apply for grid connection permits and regulatory approval from NERSA “to wheel electricity through the transmission grid.”
“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,” he said.
Municipalities will also have the discretion to approve grid connection applications in their networks based on environmental impact assessments and other factors.
“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,” the President explained.
“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.”
Asked how this decision will affect Eskom‘s future, Ramaphosa said the power utility will continue being the central player in South Africa’s electricity sector because private generators are unlikely to threaten its dominance over the next 30 to 50 years.