South Africa: Municipalities Now Allowed to Produce or Procure Their Own Power …But

  • The Minister of Mineral Resources and Energy, Mr Gwede Mantashe (MP) today gazetted amendments to the Electricity Regulations on New Generation Capacity.
  • This gives effect to President Cyril Ramaphosa’s commitment during the State of the Nation address that government will enable municipalities in good financial standing to develop their own power generation projects.

The amendments to the regulations clarify the regime applicable to municipalities when requesting Determinations under Section 34 of the Electricity Amendment Act, which includes financial good standing.

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This will ensure an orderly development that is in line with the applicable Integrated Resource Plan (IRP) and municipal Integrated Development Plans (IDPs). Furthermore, the amendments will ensure that Section 34 Determination requests are from municipalities that are in good financial standing with feasible project proposals.

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The Department has put in place an internal standard operating procedure to ensure that the requests for Section 34 Determinations are attended to in the shortest possible time.

Authors note: What this means is Municipalities must apply to the Minister for permission to produce their own power. Similairly, if municipalities would like to procure power from an independent power producer (IPP), they need to apply to the Minister.

There is also another approval tier; permission from Eskom. This ‘letter of consent’ from Eskom is a requisite for the independent power producer or municipality when applying for a generation licence from NERSA, South Africa’s energy regulator.

Author: Bryan Groenendaal

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