President Cyril Ramaphosa has announced that government will lift the threshold for embedded generating electricity capacity from 1MW to 100MW, allowing households and businesses to privately build much bigger self-generating power.
“We are today announcing a significant new step in further reforming our electricity sector towards achieving a stable and secure supply of energy,” Ramaphosa said.
The president said that the increase to the embedded generating capacity threshold will be crucial in developing a response to the energy crisis that is ambitious, bold, and urgent.
“The amended regulations will exempt generation projects up to 100MW from the NERSA licencing requirement, whether or not they are connected to the grid,” stated Ramaphosa.
He said that this will remove a significant obstacle to investment in embedded generation projects.
“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, Ramaphosa said that generation projects will still need to obtain permits to connect to the grid.
An increase in the threshold required for licencing has been recommended by energy analysts for years.
Ramaphosa said that government identified energy security as the most important enabler of economic growth.
“There is no doubt that the prospect of a continued energy shortfall and further load-shedding presents a massive risk to our economy,” he stated.
“Our ability to address the energy crisis swiftly and comprehensively will determine the pace of our economic recovery.”
Ramaphosa said that resolving the energy supply and reducing the risk of load shedding was South Africa’s single most important objective in reviving economic growth.
The president stated that Eskom was working hard to improve the performance of its existing fleet of power stations despite all the challenges that it was currently facing.
However, while these steps were positive and necessary, they were not enough to address the immediate and significant energy shortfall that threatens South Africa’s economic recovery.
“Incremental measures will not be sufficient to meet the scale of this challenge,” 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.”
Ramaphosa stated that this move should be seen as evidence of the government’s intention to tackle the economic crisis head-on, by implementing major economic reforms that will transform the South African economy.
“It also demonstrates our commitment as government to listen carefully to experts, to engage closely with our social partners, and to take on board new ideas to address our long-standing challenges,” Ramaphosa said.