Solar projects increasing local generation capacity - ESERA
MBABANE – With the uncertainty surrounding the renewal of the contract between EEC and Eskom, the emergence of solar projects in most parts of the country is projected to bring positive impact in the local energy sector.
While there are concerns from some quarters that the solar projects will impact negatively on the performance of the Eswatini Electricity Company (EEC), the Eswatini Energy and Regulatory Authority (ESERA) is looking at such projects in a positive light.
Asked by the Eswatini News to weigh in on this issue, Teclar Maphosa, ESERA’s Communications and Stakeholder Manager said the increase in distributed generation capacity largely behind customer meters, is driven by various customer goals across all customer categories. “The positive impact of this is that there is an increase in local generation capacity, which can work well for the local grid if adopted correctly,” she said.
Maphosa pointed out that the impact of solar projects in the energy sector cuts across the value chain from policy, regulation, utility practices and consumer behaviour. “From a policy and regulatory perspective, it has meant that government and the regular need to put in place the right policies and regulations to ensure that these are adopted in a safe and sustainable manner and not to the detriment of the energy sector, and especially because solar technology also has some known limitations,” she said.
As such, in response to the increase of solar projects in businesses and individuals, Maphosa said as stipulated in the Independent Power Producer Policy (IPP Policy, 2018), ESERA (regulator) developed the small-scale embedded generation framework, which would provide for a net billing mechanism and rules to enable customers to feed their surplus generation back to the grid (as and when) and be duly compensated.
“It has also meant that the utility has had to improve its power grid management to take into account the impact of distributed generation. There are, however, some opportunities for all stakeholders in this phenomenon, including for the utility, but this will require some recalibration of business strategies and operations,” she further said.
Maphosa further acknowledged that most customers that are opting for solar, do so mainly for two reasons, one of which was to cut energy costs in the long run and to also attain their environmental goals through the use of clean energy. She however warned that if the solar projects were not adopted correctly and with the appropriate mechanisms in place, this stood to negatively impact on the financial performance of EEC, as more would significantly reduce their energy uptake from the grid, yet they remained connected and use the grid as an alternative supplier, should their plants fail to provide supply.
Challenge
“The challenge is that the utility will still require the same resources as before the solar installations to maintain the distribution network that supplies these customers. And this may have an impact on the tariffs for those who remain 100 per cent dependent on the grid as the utility will still have to recover the cost of maintaining the infrastructure,” she explained.
In view of the above, Maphosa said there was, therefore, need for have in place the appropriate regulatory instruments that balance the interests of both the customer and the utility, which she said, could not be over-emphasised, as they may provided a sustainable solution through suitable tariff structure and price signals for mutual benefit.
Asked if there was any law regulating solar projects in the country in terms of levy paid to EEC for those companies, organisations and individuals, that were utilising large supply of electricity through solar panels, the ESERA Spokesperson admitted that such (law) was not in place. She was also asked if ESERA or EEC was able to manage such projects in the country in terms of levy.
“There is no law that requires any person that does solar to pay any levies to the EEC. It should be noted however, that both the Electricity Act and Tariff Methodology emphasise the importance of ensuring customers are subjected to fair tariffs that represent the cost of providing them the service they receive, and therefore, the tariff structure may be adjusted accordingly if and when the impact of a certain type of customer is deemed to no longer be aligned with the costs they impose on the grid.”
Maphosa was also asked to share her opinion on the future existence of EEC, in light of the growing number of solar projects in the country. “The electricity market is revolving, and all players need to ensure that they remain competitive and relevant especially as the installation of solar PV for behind the meter installations becomes more cost competitive to the grid.”
Maphosa said it was, therefore, important that clear policies and regulations were in place for the sustainability of the industry.
She pointed out that the development and implementation of the appropriate regulatory tools, such as the Small Scale Embed
ded Generation Framework, was meant to ensure that these were deployed in a manner that would foster co-existence with the utility by allowing it to recover its full costs of providing supply to them, thus avoiding any negative impact to its (EEC) financial sustainability.
“It is a delay in the implementation of these that may see an impact on the financial position of distributing utilities as these continue to be adopted and installed at an exponential rate,” she warned.
It is worth noting that most of these solar projects are used as renewable energy sources for sustainable energy supply with the objective of addressing climate change challenges and of course, cutting down on electricity costs.