Municipalities could stand in the way of private power

Municipalities could become a significant stumbling block for businesses that want to build private generating capacity to supply their own power.

Lifting the threshold for private power generation to 100MW has drawn praise from business leaders, energy experts, and economists. However, there are still some hurdles to overcome before these builds are approved.

While the businesses no longer require a generating licence to embark on these projects, they must still be registered with the National Energy Regulator of South Africa (Nersa).

Among Nersa’s requirements for registration is that they must acquire permission from the power distributor who runs the network that the business plans to use to transport electricity from one site to another.

These distributors could be municipalities, Eskom, or a combination of the two, depending on where the electricity needs to be transported.

But Power Law director Sue Rohrs told City Press and Rapport that most municipalities did not have separate tariffs for distribution.

The tariffs would also have to be approved by Nersa, which would require thorough cost studies to be conducted.

They would also likely be afraid of losing revenue from these customers, making them even more hesitant to allow distribution across their network.

Scatec general manager Jan Fourie said that it’s not all doom and gloom for municipalities.

“There is now an opportunity for municipalities to buy cheaper power from independent power producers and thereby increase their profit margin, or pass the benefit on to their end consumers, thereby setting themselves apart from other municipalities,” Fourie said.

He further argued councils could use this to attract investment.

In addition, businesses could arguably counter municipality’s resistance by building micro-grid solutions on-premises rather than large-scale facilities that supply to all of their locations.

But the feasibility of complete off-grid solutions in limited spaces could create more problems.

For example, solar plants with 100MW capacity would require approximately 2km², based on an estimated 0.02km² per MW.

Entire municipalities going off-grid

Several metropolitan municipalities are proactively looking into sourcing electricity from private producers and moving away from Eskom’s grid to protect their customers from load-shedding.

These include the cities of Johannesburg, Cape Town, and Durban.

Johannesburg has already signed agreements with the privately-operated coal-fired power station Kelvin to supply up to 180MW of capacity.

It has also issued a request for information for the construction of a 150MW solar plant, 50MWof rooftop solar panels and the refurbishment of an idle gas-fired plant that could generate 20MW.

The eThekwini municipality, which governs Durban, has also requested information to supply 400MW of power from private producers.

Cape Town mayor Geordin Hill-Lewis recently said his metro would publish documents detailing its procurement of private power.

These will include tenders for the purchase of electricity and timelines for connecting the private power supply to the grid.

The city is already capable of shielding its residents and businesses from a stage of load-shedding thanks to supply from the 180MW Steenbras pumped storage scheme.

Now read: Eskom can’t bring back the skills to stop load-shedding — here’s why

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Municipalities could stand in the way of private power