Electricity and Control September 2021

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Amended Schedule 2 of ERA widely welcomed

E skom and industry players broadly have welcomed the amendments of Schedule 2 of the Electricity Regulation Act (ERA), 2006, gazetted by the Department of Mineral Resources and Energy (DMRE) on 12 August to allow the operation of a power generation facility with a capacity of up to 100 MW without obtaining a licence from the National Energy Regulator of South Africa (Nersa). Eskom sees this as a progressive step that will – over time – greatly assist in the effort to provide reliable and sufficient electricity for the economy while creating space for Eskom to conduct much needed repairs on its infrastructure. As the utility continues to implement its reliability maintenance recovery (RMR) programme to achieve operational sustainability, electricity generating units are taken offline for planned maintenance and this leaves the national power system constrained. Additional customer-funded capacity alongside the contribution by independent power producers (IPPs) will therefore help in addressing the immediate supply/demand gap and reduce the risk of load shedding. This amendment, together with Eskom’s own efforts to repurpose and repower its ageing power stations, will assist in reducing South Africa’s electricity supply gap, the utility said in a statement. Other industry organisations, SAWEA (South African Wind Energy Association) and SAPVIA (South African Photovoltaic Industry Association) have also welcomed the gazetting of the amendments. SAWEA views this change as a sure indication that government is serious about driving investment in the energy generation sector, to support economic growth and diversify generation sources away from a single risk entity. The amended regulations mean the industry can now easily enter into power purchase agreements with private entities, especially intensive energy users (IEUs), and deliver projects quickly, which will stimulate economic recovery.

As with most legislation there are elements that remain open to interpretation and these will require clarity. SAWEA will continue to engage the DMRE in this regard. It has been reported that large companies, mines and farms are believed to have pending projects amounting to some 5 000 MW, which could be released with the licensing requirements now lifted. IPPs have said that several mining houses and other IEUs have reached out to the industry enquiring about projects that are ready for procurement. The association sees this as an intention on the part of IEUs to procure clean energy from the wind and solar sectors. It will enable IEUs, which contribute a significant share of South Africa’s GDP, to establish new generation capacity that will in turn stimulate the economy and free up the national electricity availability factor (EAF). Commenting on the amendments, COO of SAPVIA, Niveshen Govender noted, at first glance, several positive changes in line with industry’s call for regulatory reform. - The increase of the licence exemption threshold from 1 MW to 100 MW will impact many IEUs looking to generate their own electricity from alternative technologies, including renewables. - For the first time wheeling is specifically mentioned and considered as its own principle. - The schedule has removed reference to the ‘single customer’ and focuses on ‘an end user customer’ which could allow for interpretation from singular to multiple customers. - Third party generation is recognised with regard to a legal entity that may be an embedded generator which may contract with a distributor and then apply wheeling. On the other hand, as with previous versions of the ERA Schedule 2, Govender says the amendments have missed providing comprehensive definitions, creating some ambiguity, and have raised more questions of clarity around self-generation, the application of wheeling and trading, as well as how the inclusion of energy storage to generation projects will affect the requirements. He says SAPVIA will conduct a thorough analysis of the published amendments against the various expert inputs provided before it publishes the industry’s view on the regulatory changes and the benefits they will or should bring to the economy. The association urges the Minister and his team at the DMRE to work with NERSA, distributors, business, and industry to ensure the policy directive is clear and processes are well defined. “Together we need to create an enabling environment that encourages more participation in the sector to achieve energy security,” says Govender.

For more information visit: www.eskom.co.za, or: www.sawea.org.za, or: www.sapvia.co.za

Klipheuwel Wind Farm, Western Cape. The increase of the licence exemption threshold to 100 MW will create space for more players in the renewable energy sector.

32 Electricity + Control SEPTEMBER 2021