HomeIndustry SectorsCustomer ServicesWhat effect could embedded generation have on your business?

What effect could embedded generation have on your business?

All business eyes are on the DMRE ministry, awaiting the gazetting of the amendment to Schedule 2 of the Electricity Regulation Act that pushes the self-generation threshold up to 100MW.

Theoretically, increasing the threshold under which a business does not need a licence from NERSA to generate its own electricity will free up industry and business to build and use their own embedded generation capacity. This will give C&I concerns a reliable electricity supply and hopefully ease pressure on the national grid.

But, the publication of the amendment is just one step in a process that could entail everything from who handles environmental impact assessment studies, setting up pollution standards (and whether the projects are limited to renewable energy sources), what connection licenses will look like if these are necessary, what safety standards will apply and very importantly – the costs involved. What will Eskom or a municipality charge for the use of a grid, should a business be in a position to wheel electricity?

Longi Solar strip banner 100MW

When the self-generation threshold increase was announced, it was also explained that power projects have to be grid-compliant, even when islanded from the grid. Businesses that can generate their own electricity would be allowed to wheel electricity to the grid, subject to wheeling charges and connection agreements with Eskom and their relevant municipality.

One of the biggest sources of income for local municipalities is the sale of electricity, which can contribute up to a quarter of its total income. To stop the anticipated mass exodus of their big paying customers, municipalities will have to give those who can self-generate a reason to stay on their networks and this is where wheeling comes in. Very few municipalities currently have tariffs for wheeling but being allowed to sell to your neighbour using the municipal electricity network would be a powerful incentive not to go completely off the grid.

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Shirley Salvoldi, Eskom Corporate Specialist Retail Pricing, has most recently been working with NERSA on investigating the development of the wholesale/retail tariff pricing structure to govern the introduction of embedded generation, particularly related to wheeling frameworks and charges. 

She believes it is important that people realise the country’s electricity environment has changed: “In order for there to be a sustainable industry, well managed system and fairness and equity for all, rules, codes and tariffs will have to evolve.”

Salvoldi will be a speaker on a panel discussion delving into how business can take advantage of the threshold increase and what needs to be done in terms of policy and regulation development to get to that point.

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Her fellow panelist Kevin Robinson, Technical Sales Manager – MEA for Longi Solar, believes the intermittent nature of the utility scale programme of electricity procurement and limiting the C&I sector to self-generation of below 1MW has been harmful for local business. He believes businesses are very keen to take advantage of the threshold increase, which could have far-reaching consequences beyond a reliable electricity supply for sustainable business output.

“With the lifting of the cap to 100MW we expect the South African market to grow, thereby creating low cost dispatchable power within a short space of time. This will help to create sustainable jobs and the transmission to a lower carbon electricity supply,” said Robinson.

Register now for your front row seat to the webinar to ask the panelists about how your business can take advantage of the increased threshold.

Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.