Insights by energy sector leaders on self-generation by customers in SA
by Chris Yelland, managing director, EE Business Intelligence


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Johannesburg, 17 September 2020

Self-generation – the generation of electricity by domestic, commercial, industrial, mining, municipal and agricultural customers of electricity to supplement their grid electricity needs – is seen as a  viable answer to bring on several thousand megawatts of new generation capacity in the short-term to relieve Eskom of its current inability to meet demand.

Load shedding and COVID-19 are having a devastating impact on investment, the economy, growth and job creation in SA. However, load shedding and COVID-19 can also be a catalyst for new policy, regulatory, standardisation and training initiatives as customers of electricity, including municipal electricity distributors, begin to take responsibility for their own energy futures and become part of the solution through self-generation.

Industry stakeholders say self-generation is being held back by policy and regulatory uncertainty, bureaucratic red tape in the registration of self-generation installations of less than 1 MW, and burdensome licensing requirements for installations above 1 MW.

The president of South Africa and the minister of mineral resources and energy are talking about allowing self-generation – including by that municipal electricity distributors. However, the overwhelming consensus among stakeholders is that policy uncertainty, restrictive laws, regulations, licensing requirements, wheeling restrictions, and the “single buyer” model in South Africa, are holding things back.

Nedbank, in association with EE Business Intelligence and the Joburg Centre for Software Engineering (JCSE) at Wits University therefore hosted a dialogue on the prospects and grid impacts of self-generation by customers in South Africa. The online event, held Friday 21 August 2020 from 12h00 to 14h30, was moderated by Thabang Chiloane, executive head: group strategic relations and public affairs at Nedbank; and Chris Yelland, managing director, EE Business Intelligence.

This was the first of a series of six online energy and ICT webinars this financial year (2020) intended to initiate a constructive dialogue on critical energy and ICT solutions needed to unlock the human and economic potential of South Africa.

Presentation by Nhlanhla Gumede, NERSA

The presentation Nhalanhla Gumede, full-time regulator board member at NERSA responsible for electricity regulation, covered the policy and regulatory issues in respect of self-generation.

Details of the current legal and regulatory framework and registration and licensing requirements applicable to both grid-connected self-generation installations as well as off-grid installations were provided and clarified. The regulations and exemptions applicable to installations up 100 kW, from 100 kW to 1 MW, and those above 1 MW were covered. Installations for back-up and emergency power, as well as self-generation installations for demonstration or evaluation purposes were also dealt with. A number of important issues and impacts of self-generation were highlighted.

The slide presentation by Nhlanhla Gumede is available here.

Presentation by Leila Mahomed-Weideman, City of Cape Town

Leila Mahomed-Weideman, director: sustainable energy markets at the City of Cape Town, covered the ambitions for self-generation by City of Cape Town and other municipalities, as well as self-generation by customers within municipal networks.

Cape Town plans to diversify energy supply and reduce the city’s carbon footprint and costs over the medium to long term through self-generation, the roll-out of electricity procurement from independent power producers (IPPs), facilitating and enhancing embedded generation within the municipal network.  This will be supplemented by the development of a grid management system that facilitates demand management and manages peak demand, together with energy efficiency efforts to reduce consumption in both public and private buildings and operations.

The slide presentation by Leila Mahomed-Weideman is available here.

Presentation by Roger Baxter, Minerals Council of South Africa

Roger Baxter, CEO of the Minerals Council of South Africa, covered ambitions for self-generation by mines and industry to become part of the solution for new generation capacity in South Africa.

The presentation detailed the critical role that self-generation by mines and energy intensive industry could play in getting the economy of South Africa back on track from a growth perspective following massive Eskom electricity price increases, the devastating impact of load shedding and the COVID-19 pandemic. On the mining side alone, about 2300 MW of additional capacity could be brought onto grid in the short-term, which makes self-generation for own use is a critical component to that equation. Mining and industry want to be part of the solution, and believe that they certainly can be.

A transcript of the presentation by Roger Baxter is available here.

Presentation by Segomoco Scheppers, Eskom

Segomoco Scheppers, CEO of the Transmission Division at Eskom, covered the impacts of self-generation on Eskom and the electricity grid.

The presentation further detailed the roadmap for Eskom in a reformed electricity supply industry as presented by the Department of Public Enterprises issued in October 2019. This provides for a transmission entity which will effectively act as a single buyer which buys from Eskom Generation and IPPs and sells to Eskom Distribution, municipalities and large power users. In the interim, there have been clear indications by government on a shift from the single buyer model towards a competitive, “willing buyer, willing seller” model, also enabling municipalities in good financial standing to develop their own power generation and also procure their own power from independent power producers.

The slide presentation by Segomoco Scheppers is available here.

Conclusion

The attendance of about 500 persons at the webinar, and the vibrant question and answer session after the presentations, was testimony to the relevance of the topic at a time when South Africa is experiencing record levels of load shedding while experiencing increased electricity demand as the country emerges from the COVID-19 lockdown. In these circumstances, self-generation is seen as a clear solution in the short-term to current grid electricity shortages, that need to be unlocked in the national interest.

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