Draft Regulations
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Good news! South Africans have just under 30 days in which to provide comment in response to draft amendments to the Electricity Regulations on New Generation Capacity.

Originally published in the ESI Africa weekly newsletter on 6/05/2020

Since today marks day 41 of lockdown (level 4 from 1 May), I foresee a glut of commentary as many have had time to mull over the country’s energy predicament—where earlier this year, varying degrees of loadshedding badgered South Africans.

These scheduled power outages relieved pressure from the grid and the power utility, Eskom. However, the damage to businesses, jobs, and social cohesion was severe. Further relief for Eskom came in the form of a nationwide lockdown, which has shut down large power users resulting in a drop of between 7,500MW and 9,000MW in electricity demand.

The lockdown, in response to the COVID-19 pandemic, has resulted in the peak load and demand profiles changing. It has given Eskom a reprieve of sorts from having to implement its loadshedding plans.

The downside is that the high level of T&D maintenance and generation new build required to increase capacity and stabilise the grid has not been forthcoming during this ‘downtime’.

Eskom even went so far as to seek force majeure on wind IPPs (who have a combined installed capacity of around 1,980MW) and on its coal suppliers – an unheard of scenario in a country where coal-fired power dominates the market.

This preamble brings me to why Minister Gwede Mantashe’s draft amendment on regulations is so important. It is a massive step toward transforming the country’s electricity supply industry since the amendments will give municipalities the go-ahead to develop or procure their power generation.

Note that this is in line with President Cyril Ramaphosa’s 2020 SONA and will not have a blanket ruling as municipalities must first be in good financial standing. The national lockdown has put immense pressure on municipalities as electricity demand has shifted to mainly residential. There is also the challenge of increasing non-payment due to job losses and the continuing threat of non-technical losses.

SANEDI has also warned that the phased unlocking of the economy coupled with imminent colder winter months, will lead to an increase in energy consumption and subsequent strain on the power grid. Allowing municipalities to cut out the middleman in some instances will assist in easing the pressure and lead the way to an astute power market.

Much of these issues and developments will be discussed during next week’s Virtual series: African Utility Week and POWERGEN Africa 2020 webinar series where you can engage with speakers and fellow attendees through an exclusive virtual matchmaking digital tool. Register here for free to all the sessions.

Stay safe until next week.