Ramaphosa announces energy reform at last, opens up independent power generation
President Cyril Ramaphosa announced an easing of the red tape holding back independent power producers, during a surprise address on Thursday.
He said government is to amend the Electricity Regulation Act to raise the exemption threshold from 1 megawatt to 100 megawatts.
This means generation projects up to 100 MW will be exempt from applying for a license from national energy regulator Nersa.
The amended regulations will exempt generation projects up to 100 MW in size from the NERSA licensing requirement, whether or not they are connected to the grid. This will remove a significant obstacle to investment in embedded generation projects.https://t.co/XySPSw75Yi— Cyril Ramaphosa 🇿🇦 #StaySafe (@CyrilRamaphosa) June 10, 2021
A grid connection permit will still be required.
"This will ensure that we are able to bring online as much new capacity as possible without compromising the integrity and stability of our energy system" the president said.
Municipalities will have the discretion to approve grid connection applications in their networks.
Ramaphosa emphasized that Eskom will continue to play a central role as a generator of energy.
On The Money Show, Eskom CEO André de Ruyter says the "very good news" is welcomed by the power utility.
It is very good news to assist us in bridging the generation capacity gap that is well-known and is contributing to load sheddingAndré de Ruyter, CEO - Eskom
We think this is a really positive development for the electricity supply industry in South Africa.André de Ruyter, CEO - Eskom
Does it undermine Eskom's long-term sustainability though?
No, says, de Ruyter.
And the first priority is the national interest.
Clearly, you can't grow an economy without electricity, so if Eskom can't supply we need to get that electricity from somewhere else.André de Ruyter, CEO - Eskom
What the president announced today is exactly what the doctor ordered to get that process [of attracting private investment to new generation capacity] going, so all in all I don't see it as a threat. I see it as a natural evolution of the opening up and the liberalisation of the electricity supply industry.André de Ruyter, CEO - Eskom
How soon would South Africa see some relief in terms of electricity supply? asks Whitfield.
De Ruyter draws a comparison with what happened in Vietnam, a country that did something similar a few years ago.
Within 18 months they were able to add 17,200 megawatts of new capacity. So, I think this a very significant move that could rapidly alleviate our generation shortages.André de Ruyter, CEO - Eskom
From our side, we will be ready to accommodate the new capacity when it becomes available.André de Ruyter, CEO - Eskom
Whitfield also gets comment from other industry players:
This is an important move... As business we have been pushing for much bigger structural reforms in the economy and this is one of them.Roger Baxter, CEO - Minerals Council South Africa
On the mining side, we've got 1.6 gigs of potential renewable energy we can add to the grid within the next 36 months...Roger Baxter, CEO - Minerals Council South Africa
You'll get the mining sector, which is experiencing a big boom in prices, to start investing which then gets them thinking about expansion, which will be the first time in 15 years that's happened!Nazmeera Moola, Head of SA Investments - Ninety One
Government says the regulations will be gazetted within the next 60 days.
Listen to the interview with de Ruyter and (from 4:44) other energy players below: