Mantashe sets out terms for power producers
• New schedule puts threshold for licensing at the 1MW, while energy sector had hoped it would be raised to 10MW
Mineral resources & energy minister Gwede Mantashe has gazetted an updated schedule to the Electricity Regulation Act with the provision that any entity that wants to generate energy greater than 1MW must obtain a licence from the National Energy Regulator of SA (Nersa).
Mineral resources & energy minister Gwede Mantashe has gazetted an updated schedule to the Electricity Regulation Act with the provision that any entity that wants to generate energy greater than 1MW must obtain a licence from the National Energy Regulator of SA (Nersa).
The schedule is an updated version of one first published in 2017 and was revised to remove certain errors.
Many in the energy industry as well as commentators had hoped that in the new schedule the 1MW threshold for licensing would be raised to 10MW, which would make self-generation quicker, easier to do and more flexible.
Self-generation, also called distributed generation, is where entities build their own energy generation capacity and is viewed as the quickest and cheapest way to add additional megawatts to the grid.
Licensing processes through Nersa have to date been slow and bureaucratic, with a small number of applications successfully approved. Nersa has responded to criticism of this by saying that most applications “had not met the minimum requirements”.
Business Unity SA (Busa) has campaigned for self-generation to be accelerated and estimates that 1,000MW to 2,000MW could be added to the grid.
The regulations specify that generation projects that are smaller than 1MW or that do not connect to the national grid are exempt from the licensing process. Co-generation projects — where one part of a plant produces electricity for another part — will not require a licence. All other projects will require a full-generation licence.
Jacob Mbele, chief director of electricity policy in the department of energy, said on Thursday that the rationale for licensing was that the government as the manager and owner of the grid needed a line of sight on who connected and where. It was important for planning purposes that the government was aware of how much supply was being generated independently.
Entities also wanted to get licences quickly without a ready and viable project in the offing, he said. This includes environmental impact assessments and other processes that must be completed before licensing is considered.
“We need to have some control. The licence requirement is not the same as in other industries where it is a barrier to entry. People also worry that licensing takes time, and in the past it did. We have set up a process with Busa to facilitate this,” Mbele said.
Nersa has said it will process applications in 120 days.
GENERATION PROJECTS THAT ARE SMALLER THAN 1MW OR THAT DO NOT CONNECT TO THE NATIONAL GRID ARE EXEMPT