Opinion
- The Electricity Regulation Bill (the Bill) was passed by the National Council of Provinces in South Africa on Thursday.
- It was passed through a majority in the National Assembly on 14 March 2024.
- The Bill is seen as a way out of the country’s energy crisis by allowing more private sector participation in generation, transmission, and distribution.
- South Africa’s President, Cyril Ramaphosa, is expected to sign it into law before the national elections coming up later this month on 29th May.
The Bill provides for an already established, independent National Transmission Company (NTCSA) that will manage grid modernisation planning and investment plus the transition to the competitive electricity market South Africa needs through the formation of the Transmission System Operator. The pricing of contracts between a seller and buyer of electricity, whether a public or private operator, will be set by competitive market pricing. NERSA, the country’s energy regulator, however, will still set electricity tariffs for power supplied by Eskom, the country’s state owned energy utility.
Link to the full bill HERE: B23_2023_Electricity_Regulation_Amendment_Bill
Specifically the bill now provides for:
- the National Energy Regulator (NERSA) to consider applications for licences and the issue of licences plus the revocation and deregistration of licences
- additional electricity, new generation capacity and electricity infrastructure
- the establishment, duties, powers, and functions of the Transmission System Operator SOC Ltd and transitional measures
- The assignment of duties, powers, and functions to Transmission System Operator SOC Ltd to the National Transmission Company South Africa SOC Ltd which includes the ability to act as a wheeler and dealer of electricity.
- an open market platform that allows for competitive electricity trading.
Acceleration to a more decentralised energy sector
Coupled with the relaxation of generation license requirements for projects up to 100MW in August 2021, the Bill is expected to accelerate the decentralisation of South Africa’s energy sector and the energy transition. A recent grid survey study carried out by the South African Photovoltaic Industry Association (SAPVIA) and their partners reveals that 13305MW of solar PV and 19572MW of solar PV with battery storage are ‘shovel ready’ (construction ready) or close to it. A further 21000MW of wind power plus 7500MW of hybrid wind and battery storage are shovel ready. Read more
Bloomberg NEF expects over 3.5 gigawatts of residential and commercial solar to be added annually from 2023 to at least 2025, or until the electricity supply crisis ends – The South Africa Power Transition Outlook was produced by BloombergNEF in partnership with Bloomberg Philanthropies. Read the full report here.
The challenge now is grid modernisation through new transmission infrastructure
The Managing Director of Eskoms’ new Transmission Company, Mr Segomoco Scheppers, says that the country needs to add more than 1500 km of new transmission lines annually over the next ten years. This is to ensure transmission capacity to accommodate more than 50 GW of new generation power which will mainly come from intermittent renewable energy (wind and solar projects). Currently, Eskom’s transmission division is only adding up to 300 km of new power lines annually and last year only managed 74km. Read more
Another challenge is transformer capacity. Scheppers confirmes that more than 122 600 MVA transformation capacity would have to be added, representing 77% of Eskom’s current installed base of just over 160 000 MVA. In the last ten years, only 19 060 MVA has been added to the grid infrastructure.
Big battery
While the Ministry of Mineral Resources and Energy has released three rounds in the country’s IPP battery energy storage procurement programme which aims to procure over 1745MW capacity, the execution has been delayed. Bidders are struggling for Cost Estimate Letters from Eskom which allocates grid feed in capacity. Read more .
The problem extends to the IPP power procurement programme Bid Window 7. Read more
Eskom has also procured storage capacity directly through a few open tenders but the capacity is limited and area specific. Read more
Grid control and ownership
South Africa’s Minister of Electricity, Dr Kgosientsho Ramokgopa, has confirmed that the National Energy Crisis Committee (Necom) is considering a public–private partnership model for transmission infrastructure to accommodate new generation capacity which includes intermittent renewable energy. The capex on this is pitched at R210-billion which Eskom and the government does not have. He added that there was no intention of relinquishing state ownership of the grid. Read more
A twelve member board was appointed for the new NTCSA in January this year with Ms Priscillah Mabelane announced as the Chairperson. Since then, there has been no announcements on plans and progress of NTCSA. It would appear that they are in a corner. They have no money to invest in grid modernisation and at the same time, they are not prepared to give up ownership and control of the grid in a public/private partnership programme.
Without rapid grid modernisation, South Africa’s Electricity Regulation Bill meaningless. It would appear that the only way forward is a partially decentralised transmission sector with private sector players entering all or certain regions on a build, own and operate basis. The current lack of progress in grid modernisation may increase deployment of private generation capacity at point if use in the short term, cutting out the need for transmission infrastructure altogether.
Author: Bryan Groenendaa
Disclaimer: The articles and videos expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of Green Building Africa, our staff or our advertisers. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part Green Building Africa concerning the legal status of any country, area or territory or of its authorities.
