Thumbs up for Ramaphosa's move to end load-shedding
The renewable energy industry in SA has widely welcomed president Cyril Ramaphosa’s move to ease the country’s electricity crisis.
In an effort to resolve the country’s energy supply shortfall and reduce the risk of load-shedding, Ramaphosa yesterday announced an intervention intended to achieve energy security.
This after the country has once again been plunged into darkness, with embattled power utility Eskom failing to keep the lights on, leaving South African households and businesses frustrated.
“Following an extensive public consultation process and a significant amount of technical work undertaken by the Department of Mineral Resources and Energy, we will be amending Schedule 2 of the Electricity Regulation Act to increase the National Energy Regulator of South Africa (NERSA) licensing threshold for embedded generation projects from 1MW to 100MW,” the president said.
Addressing the nation yesterday on government’s effort to achieve a swift and lasting economic recovery, Ramaphosa said amending the regulation reflects government’s determination to take the necessary action to achieve energy security and reduce the impact of load-shedding on businesses and households across the country.
Decentralised, decarbonised system
Responding to the announcement, renewable energy industry body, the South African Wind Energy Association (SAWEA), welcomed the move to lift the threshold for companies to produce their own electricity without a licence. It views this as another indication the country is well on its way to a decentralised, and decarbonised, renewable energy generation power system.
SAWEA says it is the industry’s understanding that the Department of Mineral Resources and Energy is looking to encourage substantial investment in the energy generation sector, in order to support economic growth and diversify the generation sources away from just a single risk entity.
“When the amended regulation was issued for public comments, we made strong submissions that the allotted 10MW threshold would be too small a shift to open up this highly-regulated sector to the substantial investment that is required,” says Ntombifuthi Ntuli, CEO of SAWEA.
“We further submitted that the threshold for licence exemptions should be increased to between 50MW and 100MW,” she notes, adding this announcement means the industry can now easily enter into power purchase agreements with private entities, especially intensive energy users, and deliver projects quickly.
According to SAWEA, it has been reported that large companies, mines and farms are believed to have 5 000MW in pent-up projects, which could be released if licensing requirements were lifted.
“Renewable energy project developers have got a number of projects that have gone through all development phase permitting requirements and are shovel-ready, so we can confidently say there is sufficient capacity in the industry to meet demand from intensive energy users,” says Ntuli. This includes mining and industrial enterprises, estimated to collectively consume about 40% of the country’s electrical energy.
Meadows Energy, a South African independent power producer that focuses on developing, investment and operation of clean energy generation projects across Sub-Saharan Africa, believes this is a step in the right direction and will go a long way in resolving SA’s energy crisis.
The company points out it is the quickest way to bring additional megawatts onto the grid.
According to Meadows Energy, Ramaphosa’s announcement opens up opportunities for intensive energy users like mines to generate their own electricity; the previous licensing requirements were limiting and cumbersome for end-users.
In recent years, it notes, solar PV and wind power costs have dropped significantly, and this is one of the ways that mines can reduce operational costs.
“Meadows Energy is excited about the future of clean energy; we look forward to a meaningful participation,” says co-founder and MD Romaya Dorasamy.
Call for clean procedure
The Free Market Foundation (FMF) also welcomes the decision by the president, saying it regards it as vital that government fully commit to this process, and that it must unfold in an easy-to-understand process.
The FMF says political considerations, favours and connections ought to play no role in the permitting and licencing process that will, it is hoped, soon begin.
“The laws of supply and demand require that businesses and companies be allowed to interact with, and learn from, the needs of consumers with as little messing with prices by the state as possible,” notes FMF deputy director Chris Hattingh.
Environmental group Greenpeace Africa climate and energy campaigner Thandile Chinyavanhu says: “Greenpeace Africa welcomes president Ramaphosa’s decision to lift the threshold on independent power producers’ generation to 100MW; the next step is to capitalise on the potential of the residential sector to address South Africa’s chronic energy insecurity.”
Chinyavanhu points out that had this decision not been delayed, SA could have avoided the onslaught of load-shedding during a brutal winter, and provided South Africans resiliency in the midst of the pandemic.
“South Africa’s economy is not in its transmission lines; it is in its people. We continue to encourage the Department of Mineral Resources and Energy to implement the Integrated Resource Plan (IRP) and strengthen its renewable energy components. The IRP has the potential to reduce greenhouse gas emission by 84Mt of CO2 annually. The government needs to exploit this potential to limit the overshoot of the 1.5-degree Celsius target as agreed to in the Paris Agreement.
“Eskom’s future going forward can only be with a focus on renewables. The alternative is a very dark and cold load-shedding future,” Chinyavanhu says.
Pollution, labour worries
Meanwhile, non-profit organisation 350Africa.org has noted, with cautious optimism, the move to amend the Electricity Regulation Act.
It says while the easing of red tape for independent power producers can be celebrated, there is concern about what this means in terms of opening the door to more polluting projects.
“The president’s move to lift the licensing requirements could unlock a flood of new renewable energy projects that are key to help solve the load-shedding crisis. However, if not properly regulated, it could also open the door to many small-scale polluting projects too,” says Alex Lenferna, 350Africa.org green new Eskom campaigner.
Labour body the South African Federation of Trade Unions (SAFTU) says while power cuts are unacceptable, president Ramaphosa’s privatised strategy will only displace, not solve, the crisis.
“What they are doing is selfish – undermining both municipal and Eskom revenues, which in turn deepens the fiscal crisis, preventing these public suppliers from cross-subsidisation to make electricity and other municipal services affordable, or even available, to the masses,” says the trade union in a statement.
“That’s why SAFTU insists that socially-owned renewables, with community control and worker self-management, are absolutely vital as elements of a transformed national grid, one that can draw on sun and wind where they are strongest at any given time, and arrange major storage facilities for overcast days and windless periods, such as pumped hydropower and molten salt.”