Good news for businesses and homes who want to get off Eskom grid

Minister of Mineral Resources and Energy Gwede Mantashe has published new embedded generation regulations which could help businesses and private individuals reduce their reliance on Eskom.

In the regulations, the government has proposed lifting the threshold for embedded generation capacity from 1MW to 10MW.

This comes after President Cyril Ramaphosa announced in his state of the nation address that the government was considering lifting the threshold to reduce strain on the struggling national power grid.

“Recent analysis suggests that easing the licensing requirements for new embedded generation projects could unlock up to 5,000MW of additional capacity and help to ease the impact of load-shedding,” he said at the time.

“We will therefore amend Schedule 2 of the Electricity Regulation Act within the next three months to increase the licensing threshold for embedded generation,” Ramaphosa promised.

The licencing requirements were a stumbling block for many businesses which aimed to help alleviate the electricity crisis in South Africa by supplying their own power from solar, wind, other self-generation platforms.

New regulations

Currently, the Electricity Regulation Act requires entities who want to build power plants greater than 1MW to obtain a licence from the National Energy Regulator of South Africa (Nersa).

The new regulations state these entities will no longer have to obtain a licence for generation capacity up to 10MW.

They will still need to register with Nersa, but it’s not clear exactly how this process will differ from the current regime.

While the move will be welcomed by businesses, power experts and analysts have called for a bigger increase.

Professor Anton Eberhard, who directs the Power Futures Lab at UCT’s Graduate School of Business, told Reuters the new threshold was not high enough.

He said the Economic Advisory Board had recommended that the threshold be raised to 50MW, and pointed out the new regulations did not apply to projects aimed at adding capacity to the transmission grid.

“The minister appears to have reluctantly taken a small step forward, but failed to recognise the profound innovations in distributed energy resources and how the regulatory system needs to adapt,” Eberhard said.

The Energy Intensive Users Group (EIUG), which represents 29 of the largest industrial, manufacturing, and mining companies in South Africa, has echoed these views.

EIUG CEO Fanele Mondi earlier this month told BusinessLive that lifting the cap for self generation to 10MW was a “wholly inadequate response” to the energy crisis.

“The quickest way to bring additional megawatts onto the grid is to unlock self generation,” said Mondi.

He said there was no technical reason why self generation up to 50MW could not be allowed, and Eskom CEO Andre de Ruyter’s calls for more generation systems supported this.

“Perhaps they think from a technical point of view there might be problems, but if Eskom is comfortable with 50MW then clearly as far as they’re concerned there are no technical problems with this level,” Mondi said.

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Good news for businesses and homes who want to get off Eskom grid