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Renewables sector embraces 100MW self-generation threshold

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South Africa’s renewable energy industry has welcomed government’s official announcement that independent power producers of up to 100MW will not require a licence from the National Energy Regulator of South Africa (NERSA) to operate.

This, after the Department of Mineral Resources and Energy (DMRE) published the gazette on the lifting of the self-generation threshold to 100MW, without licensing.

The renewables industry believes this gives a sure indication government is serious about driving investment in the energy generation sector in order to support economic growth and diversify the generation sources away from a single risk entity.

In an effort to resolve the country’s energy supply shortfall and reduce the risk of load-shedding, president Cyril Ramaphosa in June lifted the renewables industry when he announced the amendment of Schedule 2 of the Electricity Regulation Act (ERA) to increase NERSA’s licensing threshold for embedded generation projects from 1MW to 100MW.

Commenting on Thursday’s Government Gazette, Ntombifuthi Ntuli, CEO of the South African Wind Energy Association (SAWEA), says: “This announcement means the industry can now easily enter into power purchase agreements (PPAs) with private entities, especially intensive energy users (IEUs) and deliver projects quickly, which will stimulate economic recovery.

However, she points out that as with any legislation, there are elements left open for interpretation and will require clarity; hence, the organisation will continue to engage with the DMRE.

SAWEA notes 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.

It adds that independent power producers earlier reported that several mining houses and other IEUs have reached out to the industry, enquiring about projects that are ready for procurement.

The association says it sees this as a clear intention to procure clean energy from the wind sector.

By lifting the threshold, it will allow IEUs, which make up a significant portion of the South African GDP, to establish new generation capacity that will in turn stimulate the economy, as well as free up the Electricity Availability Factor, says SAWEA.

Another industry body, the SA Photovoltaic Industry Association (SAPVIA), says the global pandemic continues to exacerbate an already strained economy, and the possibility of unpredictable load-shedding is adversely affecting citizens and the economy at large.

“The president and the minister for mineral resources and energy have recognised and responded with boldness to ensure we act with appropriate haste and use the opportunity to rebuild our economy,” says Nivesh Govender, chief operating officer of SAPVIA.

“Recognising the role of access to energy and energy security at the heart of economic development, there has been great work undertaken by the DMRE in timeously proposing a revision to Schedule 2 of the ERA,” says Govender.

However, he says SAPVIA will be conducting a thorough analysis of the published amendments against the various expert inputs provided before it publishes the industry view on the regulatory changes and the associated benefits they will or should bring to the economy.

“We would like to request that the honourable minister [Gwede Mantashe] and his team at the DMRE work with NERSA, distributors, business and industry to ensure the policy directive is clear, and processes are well-defined.

“While some bureaucracy is expected, it is vital that together we create an enabling environment that encourages more participation in the sector to achieve the desired outcome of energy security through mechanisms such as wheeling, multiple private PPAs and trading, thereby creating a liberated energy system.

“These changes will, in fact, impact several generation technologies with the capability of distributed generation, many private sector commercial and industrial businesses who so desperately need access to a constant supply of energy, foster much-needed investment into the energy infrastructure and alleviate the continuously building pressure on our national utility, Eskom,” says Govender.

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