This week, the Department of Mineral Resources and Energy (DMRE) gazetted the amendments to schedule two of the Electricity Regulation Act (ERA). This is in line with the announcements made by the President of South Africa to raise the embedded generation licencing threshold. The South African Photovoltaic Industry Association (SAPVIA) commented on the recent developments.
As the global pandemic continues to exacerbate an already strained economy, the possibility of unpredictable loadshedding is adversely affecting both the citizens of the country and the economy at large.
“The President and the Minister for Mineral Resources and Energy (DMRE) have recognised and responded with boldness to ensure we act with appropriate haste and use the opportunity to rebuild our economy,” says Nivesh Govender, chief operating officer of SAPVIA.
“Recognising the role of access to energy and energy security at the heart of economic development, there has been great work undertaken by the DMRE in timeously proposing a revision to Schedule 2 of the ERA,” says Govender.
“At first glance, there are several positive changes in line with Industry’s call for regulatory reform:
- The increase of the licence exemption threshold from 1MW to 100MWs will impact many intensive energy users looking to generate their own electricity from alternate technologies.
- For the first time we see wheeling being specifically mentioned and considered as its own principle.
- The schedule has removed reference to the ‘single customer’ and focused on ‘an end user customer’ which could allow for interpretation from a singular to multiple.
- Third party generation has been recognised with regards to a legal entity that may be an embedded generator who 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 unnecessary ambiguity, and
- raised more questions of clarity around self-generation, the application of wheeling and trading as well as how including energy storage to generation projects will impact the requirements.
“Is this perhaps a missed opportunity to implement a fresh Schedule 2 that would last in perpetuity, rather than requiring revision biannually as was the case in recent years?” he asks.
“SAPVIA will be conducting a thorough analysis of the published amendments against the various expert inputs provided before we publish the industry view on the regulatory changes and the associated benefits they will or should bring to the economy.
“As SAPVIA, we would like to request that the honourable Minister and his team at the DMRE work with Nersa, distributors, business, and Industry to ensure that the policy directive is clear, and processes are well defined.
“While some bureaucracy is expected, it is vital that together we create an enabling environment that encourages more participation in the sector to achieve the desired outcome of energy security through mechanisms such as wheeling, multiple private PPAs and trading, thereby creating a liberated energy system.”
“These changes will in fact impact several generation technologies with the capability of distributed generation, many private sector commercial and industrial businesses who so desperately need access to a constant supply of energy, foster much-needed investment into the energy infrastructure and alleviate the continuously building pressure on our national utility, Eskom,” says Govender.