South Africa’s minister for the Department of Mineral Resources and Energy (DMRE), Gwede Mantashe, has today officially published the gazette for the amendment of Schedule 2 of the Electricity Regulation Act. Effective from today, power systems of up to 100 MW can be set up in the country without requiring a licence from the energy regulator NERSA.
“After consultation with the National Energy Regulator of South Africa (NERSA), and any other person who may be affected, we have gazetted a notice to amend Schedule 2 of the Electricity Regulation Act to increase the licensing threshold for embedded generation projects from 1MW to 100MW,” announced minister Gwede Mantashe.
South Africa’s president, Cyril Ramaphosa, in June made the initial pronouncements on the government’s decision to raise the license-exemption threshold from 1MW to 100MW. The announcement was celebrated by South Africa’s business community with many seeing this as an opportunity to break free from Eskom’s increasingly expensive and unreliable power.
Licence exemption threshold lift to boost business confidence
The increase of license exemption threshold from 1 MW to 100 MW is set to help improve South Africa’s energy situation and lessen the energy supply burden on embattled state utility Eskom. Eskom, which supplies close to 95% of South Africa’s electricity needs has been struggling to guarantee consistent energy supply, with power blackouts expected to roll out for the next 5 years.
Energy pundits and experts believe Eskom’s monopoly on the supply of power undermines business confidence. Allowing more private power generation is one of the reforms that the government of South Africa has been implementing to improve business confidence and aid economic recovery.
Commenting on the pronouncement, Business Unity South Africa (BUSA), an organisation which represents South Africa’s private sector companies and business interests said they welcome the announcement by President Ramaphosa to the licencing exemption threshold. “This amendment will go a long way to unlocking embedded generation to enable security of supply, investment, and growth.”
“BUSA believes that upwards of 16 000 direct jobs can be created (based on a 50MW threshold). Job creation is likely to be significantly higher based on 100MW. We are confident that the economies of scale unlocked by 100MW will likely enable further investment, job creation and development of local industrial capacity,” BUSA added.
