/ 30 July 2023

Eskom unbundling ‘milestone’ announced

The Free State's Lethabo power station. File photo by Mujahid Safodien/Getty Images

The National Energy Regulator of South Africa (NERSA) has finally approved the issuing of a licence to the National Transmission Company of South Africa (NTCSA) to operate a transmission system in South Africa.

Nersa’s announcement on Friday is a milestone in Eskom’s unbundling process, which will see the power utility restructured into three separate units: generation, transmission, and distribution of electricity.

Nersa made the announcement in a statement, following a meeting on Thursday, in which it also highlighted several important decisions including the approval of a renewable energy generation licence application to Ngonyama Solar (RF) (Pty) Ltd. 

This was part of its rationale for agreeing with the draft ministerial determination for the procurement of 1 000 megawatts of new generation capacity from the Cross-Border Procurement Programme, and its agreement for the procurement of 2 000 megawatts of new generation capacity from the Load-Shedding Reduction Programme.

The NTC, which is a wholly owned subsidiary of Eskom, was established in alignment with the Department of Public Enterprises’ “Roadmap for Eskom in a Reformed Electricity Supply Industry” issued in October 2019. 

The NTC will operate the transmission system and perform integrated roles to ensure the integrity of the power system. This includes performing the role of Transmission Network service Provider, System Operator, Transmission System Planner and Grid Code Secretariat.

“This is a milestone decision by the Energy Regulator and will immensely contribute to Eskom’s unbundling trajectory,” Nersa chairperson, Thembani Bukula said.

Nersa approved NTC’s licence application following a regulatory process, including a public hearing on 11 April 2023. It said all presenters who spoke during the public hearing supported the application, which meets the licensing requirements of section 10(2) of the Electricity Regulation Act, 2006 (Act No.4 of 2006).

“The NTC is envisioned to be an independent transmission system operator incorporating, inter alia, the currently non-licensable but integrated functions of network provision, system operation and system planning,” Nersa said.

“The NTC’s independence is an important signal to all stakeholders, including investors that they will have non-discriminatory access to the transmission system. The NTC is responsible for ensuring grid stability, to which end, it is allowed to buy and sell power, but not for profit,” Nersa said.

But in terms of section 15(1) of the Electricity Regulation Act, the NTC will be allowed “to recover its efficiently incurred costs and a reasonable return on its assets,” Nersa said.

Renewable energy business gets green light

Nersa approved the issuing of a generation licence to Free State-based Ngonyama Solar (RF) (Pty) Ltd as the sixth preferred bidder of the Department of Mineral Resources and Energy’s Renewable Energy Independent Power Producer Procurement Programme Bid Window Six. The company has a contracted capacity of 140 megawatts, which brings the total connected capacity for this bid window to 1 000 megawatts for solar projects. There were no objections to the application.

The other five preferred bidders include Doornhoek PV (Pty) Ltd (120 megawatts); Boitumel Solar Power Plant (150 megawatts); Kutlwano Solar Power Plant (RF) (Pty) Ltd (150 megawatts); URSA Energy (RF) (PTY) Ltd (240 megawatts); Antlia Energy(RF) (PTY) Ltd.

Nersa also gave the green light to the draft ministerial determination for the procurement of 1 000 megawatts of new generation capacity “from a range of energy producers” under the Cross-Border Procurement Programme.  

“Accordingly, up to 1 000 megawatts should be procured from the Southern African Development Community region from a range of technologies/sources. This programme is implemented in order to close the widening energy gap as articulated in the Integrated Resource Plan for Electricity 2019–2030,” Nersa said.

“The range of energy producers from the region will either be utilities from the host countries or independent power producers that are legally operating within the host countries.”

Nersa said the electricity procured must target the South African grid as soon as reasonably possible, considering all relevant factors, including prevailing energy security risks and the time required for efficient procurement.

Nersa said it had approved the procurement of 2 000 megawatts of new generation capacity under the Load-Shedding Reduction Programme that will be supplied through a range of energy technologies and sources by independent power producers. 

It also approved a further 800 kilowatts of new generation capacity under the Emergency Procurement Programme that must be procured from a variety of local generators, including independent power producers.