A day after South Africans celebrated Heritage Day, the department of mineral resources and energy quietly signed off and gazetted Section 34 Ministerial Determinations that will hopefully lead the country’s energy transition.
The Minister of Mineral Resources and Energy, Gwede Mantashe, announced on Twitter that, in consultation with electricity regulator NERSA it was determined new generation capacity should be procured to contribute to the country’s energy security.
This determination comes as no surprise as all industries, including ordinary South African citizens, have been calling for this urgent need to be addressed.
However, to the chagrin of independent power producers awaiting a more hospitable open market, the minister determined that the “electricity must be purchased by Eskom”.
This resolution will ensure the state-owned utility remains the dominant bulk off-taker with a protected monopoly on the energy market for a while yet.
Section 34 to boost solar and wind capacity
On a positive note, Section 34 does open the way for the procurement of 11,813MW of new electricity capacity in line with the IRP2019.
However, municipalities who are willing and able to buy directly from IPPs will remain ensnared by the power utility until such time as the new generation capacity regulations are introduced.
Those looking to participate in this new capacity development, must note that the gazette specifies that the identified procurement programmes will “target connection to the grid for the new generation capacity as soon as reasonably possible”.
There is also a clear guide in that the determination allows for deviations from the timetable set out in the IRP to the extent necessary.
This takes into account all relevant factors including prevailing energy security risks, the time required for efficient procurement and the required construction timelines for new generation capacity facility.
On the whole, it is a relief to see Section 34 finally signed off as this will set new power capacity in motion. Now we await the next round of the REIPPP programme, amendments to the new generation regulation, the awarding of the emergency procurement bidding process, and and and …
Until next time.