/ 31 July 2023

Renewable energy company G7 fails in Eskom interdict bid

Eskom Gettyimages 1158766660
Eskom has announced a staggering loss of R23.9 billion for the financial year ended March 2023. (Waldo Swiegers/Getty Images)

South Gauteng high court Judge Basheer Vally has dismissed renewable energy company G7’s attempt to interdict Eskom from applying its new grid access rules.

The application was dismissed on Monday with costs. 

The application was made after Eskom changed its grid access rules, which determine the queueing process for independent power producers (IPPs) that plan to build projects and want to connect to Eskom’s transmission grid.  

G7 said: “We acknowledge and respect the decision of the court. We await the full judgment for consideration and look forward to projects coming online as soon as possible to alleviate load-shedding.”

Eskom announced the interim rules on 27 June during a presentation to industry players. It has since called on applicants to provide additional information and documents, and plans to make the allocations by 31 July.

The utility needed extra megawatts to be added to the grid, but it changed its rules because it believed projects that were not ready to build were blocking other developers from proceeding with their projects.

In the past, applying for grid access was one of the first steps in the development process. Eskom allocated grid access on a first come, first served basis. A developer could therefore secure grid access without a ready project.

These constraints were visible last year when none of the 23 proposed wind projects in the sixth bid window of the government’s renewable energy independent power producer procurement programme were granted a preferred bidder status because of grid constraints.

G7 argued in court that the new rules would require power producers to incur high development costs to obtain another water use licence, environmental authorisation and another signed power purchase agreement before they would have any guarantee that their projects would be able to connect to the grid.

“However, companies are disincentive from investing in those processes, and sometimes even unable to do so, without knowing if they actually have a grid capacity allocation, as such investment can be wasteful,” G7 said.

They also argued that Eskom was not authorised to take the decision to implement the new rules because they constituted an amendment to the grid code, which would require approval from the national energy regulator.

G7 argued that under the Electricity Regulation Act, it is the National Energy Regulator of South Africa’s exclusive power to implement the grid code. 

In response, Eskom said that having queuing rules that give preference to shovel-ready projects is in the national interest because they would get new power on the grid quickly to end load-shedding.

Eskom argued the “country would continue to suffer load-shedding …because once a party was in front of the queue they could hog their space without demonstrating readiness and with no benefit to the public”.

G7 said it had incurred R55 million in costs to develop two wind farms now at risk of not going ahead. 

Had the interdict been successful, the allocation of grid access to new projects would have been frozen and stalled. 

The court did not decide on the second part of G7’s application, in which it wants the court to review and set aside the grid-queuing rules. This part of the application will be heard in September.

Eskom can continue to implement the new rules until the court decides on the second part of G7’s application.

Eskom did not immediately respond to questions.

Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa