Nersa's new off-grid generation rules draw fire from critics
Publish date: 15 May 2018
Issue Number: 556
Diary: Legalbrief Environmental
Local business groups have poured cold water on the National Energy Regulator of SA's (Nersa) recently published Rules for Registration of Small-Scale Embedded Generation, writes Legalbrief. AfriBusiness sees the proposed regulations seeking to compel consumers to register their generators as an attempt by government to recover from its low electricity sales‚ which are hitting its revenue. A TimesLIVE report notes that the draft consultation paper will require consumers to register with Nersa before connecting generators at their homes or businesses. The rules apply both to off-grid systems‚ with no connection to the national electricity system‚ and systems connected to the grid in any way – whether or not they are intended to feed electricity back into the grid. Small-scale embedded generation (SSEG) includes generators‚ solar photo-voltaic panels and backup generators. ‘AfriBusiness believes Nersa is attempting to create a database of private electricity producers which could be used to identify individuals who are living off the grid completely or partially‚ which will allow Nersa or municipalities to levy fees for the operation of such systems,’ the group said. ‘Nersa’s attempt to regulate private electricity production is another example of unnecessary interference by the state to hinder the private sector‚’ said AfriBusiness. The organisation added that private electricity production is not harming anyone except ‘those state-owned enterprises and local municipalities that are now bearing the brunt of their efforts to have South Africans use less electricity from local suppliers’.
The rules were ‘draconian’, energy consultant Ted Blom said last week. A Cape Times report notes that Blom said, under the rules, owners and buyers of small-scale electricity generators less than 1MW should apply for the establishment of the installation to their local distributor – either Eskom or the local municipality. ‘I view the rules as draconian, as they apply to all small installations, whether for private or public use and whether they are to be connected to the grid or not,’ Blom is quoted in the report as saying. The Department of Energy last year issued a Government Gazette notice in which it said electricity generation facilities with an installed capacity of no more than 1MW did not need a generation licence provided that, among others, the facility supplied electricity to a single customer with no wheeling of that electricity through the national grid. The exemption created an opportunity to develop small-scale power projects at ‘grassroots’ level that could benefit small towns and provide electricity at a decentralised level ‘where infrastructure challenges can impede the effective reticulation of electricity’, according to Lelo Mdhladhla of independent electricity trader PowerX. Mdhladhla said the number of companies that own small-scale projects was on the rise and they were becoming a new wave of power generation in the rest of Africa.
Retailers of off-grid electricity generation in Nelson Mandela Bay say the proposed rules by the industry regulator will be impossible to police and will hit their bottom line. According to a report in The Herald, Blackwood Power CE Rory Stear said the proposed rules could hamper the industry’s potential to create jobs. Although bigger companies were likely to handle the registration process on behalf of new clients, Stear said this cost would be included in the price of solar panels, making this a more expensive option for consumers. ‘I think Nersa should stick to regulating tariff costs and not trying to cover up what are clearly the inefficiencies of Eskom. It’s time to focus on winning (Eskom’s former success) back rather than punishing emerging industries that are part of the solution.’ Rubicon sales director Greg Blandford said the draft regulations could hold dire consequences for the industry. ‘It would definitely cause civil disobedience. Many people have already invested in renewable energy and for them to register . . . would be similar to the e-tolls in Gauteng.’ He said the proposal would work against the industry’s goal of creating sustainability. Microcare sales and marketing manager Gareth Burley said the industry would definitely take a knock, but that the regulations could also bring benefits. ‘There are a lot of fly-by-night (installers) who give the industry a bad name,’ Burley said. 'A level of regulation could put a stop to that.' SA National Energy Association chair Brian Statham said the consultation paper was too broad in its intent in that it covered equipment both connected and not connected to the grid. ‘This seems to be an overkill and unnecessary in terms of regulating the integrated electricity industry. It is not clear how Nersa will benefit from collecting all this information and the real value added,’ Statham said, according to the report.
Nersa's draft plan on the Registration of Small-Scale Embedded Generation may negatively impact on development of small grids as they would need to be registered under the draft plan, notes a News24 report. SA has vast untapped potential for renewable energy with the country's abundant sunshine and long coastline. The World Wide Fund for Nature's Renewable Energy: Facts and Figures 2017 report shows that SA's wind energy potential alone is 6 700GW if wind farms had to be installed across the country, except for in exclusion zones such as national parks and settled areas. Irena data has shown that the deficit of electricity access in sub-Saharan Africa has decreased for the first time as millions now have electricity through solar installations or mini-grids.
Following the publication of the draft regulations last month, Energy Expert Coalition has received letters from more than 10 000 frustrated people after it launched a campaign to gather comments. A Cape Times report notes that in a statement, the group said they would challenge this all the way to the courts. The public has until 31 May to comment on the draft rules.