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Jul 27, 2012

Regulations still not conducive to private power production – Saippa

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Ongoing differences between independent power producers in South Africa and government legislators and regulators regarding the rules governing independent power producers surfaced at a recent workshop convened by industry body the South African Independent Power Producers Association (Saippa) in June.

“Regulations of the National Energy Regulator of South Africa and the Electricity Regulation Act (4 of 2006) are making the process to develop a power plant and sell electricity into the national grid complicated,” said Saippa MD Doug Kuni.

He commented on the proposed second amendment to the Electricity Regulation Act, stating that an independent power producer will have to obtain Ministerial permission to sell electricity, even if a company supplies its own needs, unless it supplies electricity to a State-owned enterprise.

“Under the existing Act, a company can supply itself and the Act should remain nondiscriminatory in that regard,” he said, noting that independent power production could be developed by allowing companies to supply electricity to their own operations.

Further, Saippa member companies questioned the necessity of providing a 24-hour forecasting for power production by each plant connected to the grid, as required by the South African Grid Code. The code also requires plants to provide a six-day forecast for power production.

Saippa members believe that regulations do not take cognisance of power producers’ challenges, specifically with regard to investments and financing, as well as risks, and place an onerous burden on aspiring independent power producers.

However, State-owned power utility Eskom Grid Code Secretariat transmission system operator Bernard Magoro emphasised the centrality of maintaining grid stability for the utility, which motivated the changes to the grid code.

Each plant would be required to have three control modes to be able to respond to the grid network operator’s settings and support the voltage of the network, especially under emergency conditions, he explained.

“Scheduling and dispatch 24-hour visibility are required for Eskom to manage the systems and control outage processes, as well as enable real-time operation. “The utility must be able to communicate directly with plants to curtail or produce electricity under emergency conditions,” he noted.

“Increased forecasting is key and is necessary for grid stability and to regulate the quality of supply. We must ensure that plants do not compromise the system,” he emphasised.

Meanwhile, Eskom Grid Access Unit head Wolfgang Böhmer said the utility was drowning in the more-than- 600 applications it had received for connections to the grid by independent power producers and was finding it challenging to effectively evaluate projects and grant grid access.

“Policies are not well coordinated and there are risks we must consider. The challenge is to ensure that we streamline the processes and we are engaging weekly with the Department of Energy to influence policymaking with regard to power procurement, which remains a challenge,” he said.

Edited by: Martin Zhuwakinyu
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