Power pro­duc­ers look to JSE for en­ergy trade

CityPress - - Business - GER­RIT VAN ROOYEN busi­ness@city­press.co.za

In­de­pen­dent power pro­duc­ers are hop­ing to trade on the JSE in the next three years so that con­sumers are not forced to use Eskom any more.

Prome­thium Car­bon, con­sul­tants in the green en­ergy in­dus­try who re­cently com­piled guide­lines for in­de­pen­dent power pro­duc­ers (IPPs), has even had exploratory talks with the JSE to as­cer­tain whether such a trad­ing process would be pos­si­ble, ac­cord­ing to Rob­bie Louw, founder and di­rec­tor of Prome­thium.

IPPs are now in a race to prof­itably sell enough power to big con­sumers.

Big elec­tric­ity users such as Sa­sol and Ton­gaat Hulett are al­ready sell­ing some of the power they gen­er­ate them­selves to Eskom, but not to other power con­sumers.

There are, how­ever, no reg­u­la­tions pre­vent­ing any­one from gen­er­at­ing elec­tric­ity in South Africa and sell­ing it to some­one else.

“Many of the build­ing blocks for a free elec­tric­ity mar­ket in south­ern Africa al­ready ex­ist,” says Louw.

A JSE rep­re­sen­ta­tive said that the ex­change didn’t have the abil­ity to trade elec­tric­ity and that it was in the very early stages of in­ves­ti­gat­ing the pos­si­bil­ity of hav­ing fi­nan­cial in­stru­ments that did so.

The Fi­nan­cial Ser­vices Board would also have to give the JSE the go-ahead for en­ergy fi­nan­cial in­stru­ments, and the le­gal re­quire­ments for such in­stru­ments would have to be clear.

Once the fi­nan­cial in­stru­ments were in place, the mar­ket par­tic­i­pants would have to be ed­u­cated about them, or else there wouldn’t be trade in power on the JSE.

Pro­fes­sor An­ton Eber­hard, en­ergy ex­pert at the Uni­ver­sity of Cape Town’s post­grad­u­ate busi­ness school, agreed that a statu­tory prin­ci­ple of free and fair ac­cess to the na­tional power grid was al­ready in place.

“It would, how­ever, help if the Elec­tric­ity Amend­ment Act made ex­plicit pro­vi­sion for that,” said Eber­hard.

“I don’t be­lieve full com­pe­ti­tion will hap­pen any­time soon, but there is noth­ing pre­vent­ing big power users from choos­ing their power pro­ducer,” he said.

The ac­cess fees Eskom im­poses for sell­ing power on its na­tional net­work is a big stum­bling block to free trade of power on the net­work.

Shaun Nel, spokesper­son for the En­ergy In­ten­sive User Group, said these ac­cess fees made it un­eco­nom­i­cal for IPPs to sell power to other con­sumers in this way.

Ac­cord­ing to Louw, the prob­lem is that na­tional en­ergy reg­u­la­tor Nersa doesn’t reg­u­late Eskom’s ac­cess fees.

How­ever, Nersa is busy re­view­ing the pos­si­bil­ity of reg­u­lat­ing the ac­cess fees. Louw said that thanks to the elec­tric­ity cri­sis, prices had risen and made it more at­trac­tive for IPPs to also sell power.

Eber­hard said some IPPs were al­ready sup­ply­ing elec­tric­ity at a cost lower than Eskom’s av­er­age cost, but he said Eskom wouldn’t wel­come any big com­peti­tors in the power mar­ket. Al­though elec­tric­ity prices were high, Nel said the cost of gen­er­at­ing large quan­ti­ties of elec­tric­ity was also still very high.

“Con­sumers who are al­ready gen­er­at­ing their own elec­tric­ity will sell it if they have the ca­pac­ity for gen­er­at­ing ad­di­tional power,” said Nel.

He said it would be un­eco­nom­i­cal, gen­er­ally, to bor­row the amounts of money needed to gen­er­ate power in large quan­ti­ties. Ac­cord­ing to Louw, a fur­ther chal­lenge to the free trade in elec­tric­ity is the es­tab­lish­ment of an elec­tronic plat­form on which the elec­tric­ity can be traded.

It’s in this re­gard that they see the JSE as the per­fect op­por­tu­nity.

– Ad­di­tional re­port­ing by Justin Brown

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.