HomeFeatures/AnalysisThe value of an open market pushes regulatory boundaries

The value of an open market pushes regulatory boundaries

An opinion editorial by Dr Sam Duby published on ESI Africa yesterday illustrates two energy-wise consumers, one in Germany and the other in South Africa.

Originally published in the ESI Africa final newsletter for 2019 on 19/02/2020

The article puts our regulatory framework into perspective when looked at from an electricity user’s perspective. The initial euphoria felt when connecting an off-grid system is immediately stifled by regulation that hampers consumers’ ability to participate in an open market.

These rules are necessary to keep the system reliable and safe but are, in its current form, extremely restrictive.

For the prosumers in Duby’s article, the motivation is the same: being able to produce clean energy for self-consumption, and that supports the community when excess power is available.

However, the difference between these two energy-wise users is the regulatory playing field. In Germany, policymaking allows for micro-grids with a flat rate for energy that can feed into the grid.

Duby explains that in Germany, the rapid ‘dispatchability’ of the power also means prosumers make extra money selling ‘grid smoothing’ services to the national grid.

Whereas in South Africa, a household or business striving to generate power for own use will be reined in by outdated regulation.

This predicament is why a Section 34 Ministerial Determination to give effect to the 2019 Integrated Resource Plan is essential to the delivery of a competitive open market landscape.

Promulgation of the IRP will open the door to an entirely new scene for Independent Power Producers (IPPs) of all sizes. As Duby points out, the logical extension of this move is a more open market across the board.

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Ahead of this revamped, modernised regulatory framework, the City of Cape Town is preparing to set up an IPP office of its own. This office will require permission from the national treasury, but since the city is determined to ride the wave of a new era it is likely to succeed.

I am privileged to live in this progressive and forward-thinking city; however, I remain wary of how slow the wheels of legislature turn.

In this context, it is the only time I’m willing to say that loadshedding in South Africa has a positive impact in that it is helping to increase the pace of change.

Until next week.

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.