In the next decade, today’s South African youth will experience a very different energy landscape from pre-2021. How can I be so emphatic in this statement?
It relates to President Ramaphosa’s announcement last week, increasing the threshold for companies to produce their own electricity and upping the limit tenfold to 100MW without requiring a licence!
However, you can argue that many such utterances to shake up the market have come to nought.
How is this instance any different?
This change in regulation is a determining factor that will see today’s youth become adults in a country where Eskom provides baseload energy through its well-maintained coal-fired power plants.
Since the utility will no longer exist as the sole generation player, its management will (hopefully) focus on aligning funds and expertise with maintaining its power plants.
The utility will also play a majority role in the transmission network evacuating power from all technologies to where it is most needed.
Likely, Eskom will also become a medium renewable energy provider through the country’s hydrogen roadmap. While the energy regulator, NERSA, will tackle the critical role of managing a highly diverse electricity environment.
Today’s youth could very well be the young workforce of tomorrow, oiling the service delivery aspect that NERSA will have to supply.
That’s all in the future.
As we celebrate the youth of today in South Africa, take note that this bold market shakeup hinges on the final amendment to Schedule 2 of the Electricity Regulation Act being published by the Department of Mineral Resources and Energy. According to the President, this should be “within the next 60 days, or even sooner,” while he made it clear that this is non-negotiable for South Africa’s future.
The President appeared adamant when he added: “The amended regulations will exempt generation projects up to 100MW in size, from the NERSA licencing requirement, whether or not they are connected to the grid. This will remove a significant obstacle from investment in embedded generation projects.”
He also pointed out that businesses who generate their own electricity will be allowed to wheel electricity to the grid, “subject to wheeling charges and connection agreements with Eskom and relevant municipalities”.
Understanding how to procure wheeled solar and wind will be an essential step for South Africans. ESI Africa will be hosting a virtual workshop and discussion on this topic in the coming months. If you are interested, please send me an email, and I will notify you when registration is open.
There is an estimated 5,000MW’s worth of embedded generation projects currently constrained by regulation. Opening the floodgates to allow these plants to operate will alleviate loadshedding and create a more competitive electricity industry.
Initially, mining, industrial enterprises and agribusiness will dominate these embedded generation projects. These sectors account for about 40% of South Africa’s power demand.
While another two potential embedded generation power producers are likely to take up this opportunity, namely municipalities and the thousands of suburbs that make up South Africa’s map. The prospect will be there for ratepayers’ associations to galvanise residents to develop micro-grids in their suburb.
With this change in the regulation, a new energy landscape will unfold – one to which the youth of today will become accustomed while the current monolithic, highly regulated, and constrained power system is all but forgotten.
Once securely implemented, this announcement means a fluid entry into Power Purchase Agreements between private entities and quicker project delivery. The downside will include a complicated electricity market for Joe Public to grapple with while higher electricity prices fluctuate with demand and supply.
However, since today’s youth are engaged and quick to seek out information, they will be well-equipped to operate in this new market. As adults, they will effortlessly select where and when to purchase electricity, what energy efficiency methods to employ and how to work with a much smaller carbon footprint.
Here’s to the future.
Wishing you a happy Youth Day in South Africa!
Until next week.