Businesses may soon be allowed to generate power for the grid

After Energy Minister, Jeff Radebe, submitted an advisory letter to the National Energy Regular of South Africa (Nersa), it is believed that small businesses may soon be allowed to generate power for the country’s grid.

As reported by Engineering News, the energy minister’s office confirmed that Radebe’s note to the energy regulator was not an instruction. Instead, it was a letter to inform Nersa to consider approving licenses for small-scale embedded generation (SSEG) projects.

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Radebe recommends Nersa approve licenses for SSEG

This comes after the energy regulator was forced to withdraw its proposed regulatory rules on SSEG below one megawatt.

In April, Nersa submitted the draft Rules for Registration of SSEG for written comments.

In essence, the energy regulator proposed to administer the registration process of small businesses who wished to generate power for the grid, independent of Eskom.

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However, this was met with backlash, forcing Nersa to withdraw the draft. Ronald Chauke, an energy portfolio manager at the Organisation Undoing Tax Abuse (OUTA), warned that access to natural energy sources should not be policed.

“Our experience shows that when government interferes or seeks to over-regulate in areas that it should not control, or is unable to control, its authority will suffer a crisis of legitimacy.

“Tapping into free natural energy sources (sun and wind) must not be controlled or subjected to an onerous registration process, especially if these systems are ring-fenced and not linked to the grid,” he noted in a statement.

Small business can generate power soon

It may be that Radebe concurs with Chauke and others who believe that businesses and households should be allowed to manage their own power generation needs.

Nersa welcomed the energy minister’s gesture but warned that it has to, unfortunately, follow due process in arriving at a conclusion on the matter.

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“It should be clarified that the Minister did not direct Nersa to license, but rather notified Nersa that he has approved a deviation from the IRP (2010-2030) in accordance with section 10(2)(g) of the Electricity Regulation Act of 2006,” Nersa said.

If Radebe’s intervention bears any fruits, then according to the South African Independent Power Producer Association’s Thomas Garner, then we could see as much as 3 000MW of energy being fed into the grid.

“The private sector can now go ahead and invest capital in generation assets that would increase energy security for their businesses, as well as for South Africa at large.

“This will impact the country’s balance sheet positively, as Eskom would not need to build new capacity or sign new power purchase agreements with sovereign guarantees, and it would lead to Eskom burning less diesel to keep the lights on,” he said.