Private energy generators have been given free rein to develop their own power to “reduce the burden” on an ailing Eskom, which has subjected the country to debilitating rolling blackouts for more than a decade.
President Cyril Ramaphosa announced on Thursday that schedule two of the Electricity Regulation Act would be amended to allow private generators to develop up to 100MW of power without requiring a licence from the National Energy Regulator of South Africa (Nersa).
The schedule two amendments would be published in 60 days or sooner, he said.
The previous threshold for private generation without a Nersa licence was 1MW. In May, the Democratic Alliance called for this to be lifted to 50MW, and industry experts have been lobbying for a 10MW cap.
Responding to questions from journalists, Ramaphosa reiterated that for Eskom to have a future, it would have to be divided into three entities, including a separate generation component.
The other two mooted entities would focus on the transmission and distribution of energy.
“On the generation side, it is always good to have competition: that is what is happening in other countries that we have looked at and studied,” Ramaphosa said.
“Even in a country like China, they have a number of generators that compete [and] give consumers price-competitive offerings. Efficiency is enhanced and every generator is then kept on their toes to make sure that they offer the best service
“But Eskom is the biggest generator in our country with 45 000MW,” Ramaphosa said, adding that it would, “easily” take up to 50 years for any company to match Eskom’s generation.
“But right now, because of the challenges that Eskom is going through, we need to ease that pressure on Eskom and allow other generators to come to the fore … We have said repeatedly that Eskom is just too big to fail in the hands of [the] government,” he contended.
The president stressed that companies would be able to sell to municipalities.
“They [private producers] will generate for themselves and be able to sell to others, their neighbours and all that,” he said.
Earlier, during his prepared speech, Ramaphosa said that although no Nersa licence was required for up to 100MW, the regulator still had to issue permits to private power producers.
“Generators will also be allowed to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with Eskom and relevant municipalities.
“However, generation projects will still need to obtain permits — a grid-connection permit — to ensure that they meet all the requirements for grid compliance. This will ensure that we are able to bring online as much new capacity as possible without compromising the integrity and stability of our energy system,” Ramaphosa said.
“This intervention reflects our determination to take the necessary action to achieve energy security, and to reduce the impact of load-shedding on businesses and households across the country.”
Eskom had been consulted and was part of the process, Ramaphosa said.
This week South Africa was hit with renewed, debilitating rolling blackouts countrywide, because Eskom had breakdowns of up to 16 000MW of its total 45 000MW, which was compounded by freezing temperatures as winter set in.
Ramaphosa acknowledged that the country’s strained energy resources would be detrimental to the already limping economy.
“Our ability to address the energy crisis swiftly and comprehensively will determine the pace of our economic recovery,” the president said. “We know that resolving the energy shortfall and reducing the risk of load shedding is our single most important objective in reviving economic growth, because there is no economy that can really grow substantially without energy security.”