Capetonians to sell excess electricity to local grid for cash

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 24 Jan 2023

Cape Town residents and businesses will soon be able to sell excess electricity they generate for cash.

This, after the city received National Treasury exemption to purchase additional power from households and businesses, as the country continues to battle power blackouts.

The move comes after president Cyril Ramaphosa this week announced households and businesses will soon be allowed to sell surplus electricity from rooftop solar panels into the national grid.

Eskom, which supplies the bulk of South Africa’s electricity, has been struggling to keep the lights on and has been implementing severe bouts of load-shedding over the years.

According to the president, lack of investment in new generating capacity, poor power plant maintenance, corruption and criminality, sabotage of infrastructure, rising municipal debt and a lack of suitable skills at Eskom have all created a perfect storm for the power crisis facing the country.

Over the years, Cape Town has been at the forefront of calling on government to be allowed to procure its own energy in order to wean itself from the embattled power utility Eskom.

Cape Town mayor Geordin Hill-Lewis today announced the city can now pay cash for power fed into the local electricity grid.

In a statement, the city says businesses, and in time residents, will receive cash for selling their excess power into Cape Town’s grid.

Load-shedding protection

This, after National Treasury exempted the city from competitive bidding processes not designed for the coming energy revolution.

According to the city, the sale of excess power by homes and businesses with small-scale embedded generation (SSEGs), among other generation solutions, will contribute to Cape Town’s goal of four stages load-shedding protection within three years.

“The future is now, as we aim to immediately rollout the paying of cash for power. Payments to commercial customers will be possible before June, and within the year for any Capetonian with the necessary city-approved generation capacity. If you’re thinking of investing in a solar system, it just got more attractive,” says Hill-Lewis.

“We aim to buy electricity from as many city-supplied customers as are willing to sell to us. These customers may now produce as much power as they can from their approved systems and feed it into Cape Town’s grid. Under this plan, we will also pay these customers an incentive over and above the NERSA-approved tariff as they help us turn the corner on load-shedding.”

As the network of home power producers grows, so will the city’s energy security, he adds.

“This has the potential to be a powerful force to end load-shedding over time, together with our independent power procurement programme, and Power Heroes incentives for voluntary energy savings,” says Hill-Lewis.

The National Energy Regulator of South Africa (NERSA) has approved a rate of 78.98c/kWh for this financial year for the city to pay power sellers. The city adds a 25c/kWh incentive tariff on top of this, it notes.

Hill-Lewis points out the city is focused on ending load-shedding over time, and has steadily been laying the groundwork to enable payment for excess small-scale power, including:

• Dropping a policy requirement for power sellers to be “net consumers” of energy, which previously only allowed for municipal bills to be credited for excess power, instead of actual cash payments;

• Commencing a wheeling trial for commercial and industrial users which is helping to iron out technical and billing issues ahead of mass-scale rollout; and

• Allocating R15 million budget to pay for energy generated by small-scale embedded generators for the remainder of this financial year until June.

The city explains that SSEG and wheeling customers who want to feed energy into the grid need to have their system approved and have an Advanced Metering Infrastructure meter installed by the city.

It notes this is a bi-directional meter that allows accurate reporting of the amounts of energy consumed and generated.

“We know this meter is still too costly for many, and we are working on finding an alternative option of comparable quality and reliability. Customers who want to upgrade their systems to make use of this existing development need to have the upgrade approved by the city.”

Treasury exemption

Hill-Lewis adds: “At our request, National Treasury granted Cape Town an exemption from competitive bidding / tendering processes that may otherwise apply to this process, using section three of the Preferential Public Procurement Framework Act.”

He says the exemption is necessary because South Africa’s public finance legislation did not foresee energy procurement from independent power producers, only from Eskom.

“The result is an insurmountable admin burden not suited to the dynamic, decentralised process of buying and selling electricity that is wheeled into the grid by a great number of small-scale generators, all of whom are being paid at the same price (and at a cost that is cheaper than Eskom).

“The requirement of a ‘competitive bidder / single winner for goods and services’ would make the wheeling programme a non-starter.

“Aside from competitive bidding exemption, the city’s power purchases will be fair, equitable, transparent and cost-effective in compliance with section 217 of the Constitution.

“The city furthermore does not envisage entering into further contracts with feed-in customers, and is instead finalising a pro forma standard agreement.”