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Nersa mulls rules for grid-tied rooftop solar

Nersa mulls rules for grid-tied rooftop solar

Photo by Duane Daws

10th April 2015

By: Terence Creamer

Creamer Media Editor

  

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Balancing the financial sustainability of electricity distributors with the creation of a conducive environment for investment by households and businesses in rooftop solar systems, emerged as a key theme of the National Energy Regulator of South Africa’s (Nersa’s) public hearings on the regulatory rules for small-scale embedded generators.

The regulator convened the hearings in an effort to canvass public input on the proposed future rules for grid-tied small-scale photovoltaic (PV) generators, having published a consultation paper on the matter earlier in the year.

In the paper, Nersa indicated that the legal structure for projects between 100 kW and 1 MW was currently absent. It argued that it had become urgent to introduce “proper” rules, as grid-tied rooftop solar was already “alive and growing”, with several municipalities having already drawn up procedures for connecting such systems

Nersa also noted that the draft update of the Integrated Resource Plan estimated that embedded residential and commercial PV had the potential to be as high as 22.5 GW by 2030.

Presenting the South African Local Government Association’s perspective, Aurelie Ferry indicated a number of municipalities had already agreed in principle to support embedded generation. But while uptake should be encouraged, the implementation model should seek to limit the impact on municipal revenue.

City Power’s Paul Vermeulen conceded that grid-tied rooftop PV was a potential threat to the sustainability of the traditional, regulated South African electricity distribution industry. However, the Johannesburg utility was nevertheless of the view that embedded generation should be supported and that the risks be mitigated through a tariff regime that both sustained the electricity distribution industry and encouraged private investment.

City Power proposed a charge of 50c a day per kVA of distributed generation capacity to cover the expected cost increases associated with connecting such generators.

Vermeulen also called for clear rules of engagement, including investors making connection applications to distributors, which should be allowed to approve or decline applications based on technical issues that may impact on the quality of supply.

Eskom’s Deon Conradie argued that policy and regulation should cater for an evolution of the business models of distributors to ensure their sustainability in a market where technology disruptions could see customers leaving the grid, thereby stranding utility assets.

“The future vision must be for an evolution to a market where many customers can become producer-consumers, or prosumers, and still be retained as active customers on the grid,” Conradie argued.

Eskom was also of the view that there should be a fair recovery of costs, with a balance struck in such a way that charges are not so high that customers retreated from the grid and not so low that they result in those without embedded generation cross-subsiding those that had invested.

To cater for some of the distributor risks, CSIR’s Tobias Boschofs-Niemz urged Nersa to consider championing the creation of the national ‘central power purchasing agency’, which could be the sole offtaker for energy from embedded PV generators fed back into the grid.

Its role would be to buy the energy from embedded generators and deliver financial compensation to the municipality or the utility distributor for lost gross margins due to onsite self-consumed energy.

“Such an agency de-risks the business case for PV owners and makes municipalities financially indifferent to embedded PV,” Boschofs-Niemz said.

But he conceded that such an agency would take time to develop and suggested that Nersa oversee a staged process, whereby net metering is instituted immediately, using the avoided costs for the electricity distributor as the basis for the tariff.

Boschofs-Niemz argued, too, that the average tariff would need to increase by less than 2c/kWh to fund a PV fleet of 3 GW, making it arguably one of the least expensive new-build options available to South Africa.

Together with just about all other presenters, the South African Independent Power Producer Association’s Ian Langridge urged Nersa to expend the embedded generation debate to beyond solar PV and to include other technologies.

Langridge also questioned the decision to limit the framework to projects with capacities of less than 1 MW, arguing for the inclusion of projects up to 5MW.

Nersa indicated that it planned to publish a new regulatory framework for small-scale embedded generators by the end of May.

Edited by Creamer Media Reporter

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