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Thresholds on private power generation impeding agribusinesses

22nd November 2019

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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While the current regulations on private embedded energy generation have aided many agricultural operations in cutting their energy costs significantly, the imposed threshold on small-scale embedded generation (SSEG) is excluding many larger agribusinesses from meaningfully using renewable energy, says energy solutions provider Energy Partners Solar CEO Manie de Waal.

He explains that the existing legislation allows private organisations to generate their own electricity up to a maximum installed capacity of 1 MVA.

Installations over 1 MVA are allowed, but require the granting of a generation licence by the National Energy Regulator of South Africa (Nersa).

“There are a lot of opportunities for larger energy-intensive agricultural operations to cut their electricity spend and become more efficient through the use of renewable energy. 

“Dairy farms and abattoirs, for example, are prime candidates for photovoltaic (PV) systems larger than 1 MVA in size, owing to the fact that they require constant energy for heating, cooling (refrigeration) and milking every day of the year,” he says.

However, he notes that the requirement that these systems need to be licensed is a major impediment.

“Nersa has put procedures in place for businesses to apply for generation licences, but we know from experience that these are almost never granted.”

De Waal adds that the limitations placed on SSEG systems larger than 1 MVA also seem quite arbitrary.

“We have seen grid-tied PV systems much larger than 1 MVA, commissioned before the introduction of the licensing requirements in 2018, run smoothly, without causing any disruption to either the client or the national grid.

“In our opinion, requiring businesses to apply for a nearly-unattainable licence before they can become more self-sufficient is an unnecessary barrier for growth.”

With this in mind, De Waal hopes Energy and Mineral Resources Minister Gwede Mantashe reviews the existing energy regulations and removes this limitation in the near future.

“In the meantime, we believe that the best option for South Africa’s large agribusinesses is to get the most out of SSEG systems smaller than 1 MVA. This only requires approval from the local municipality, which is fairly straightforward to attain.”

He advises that the business enter into a power purchase agreement (PPA) with a capable service provider.

“Entering into a PPA would see a dedicated service provider owning and managing the PV system on site, while selling electricity to the client at a guaranteed lower rate. PPA providers are also well equipped to get the necessary approvals from the local municipality in the shortest amount of time.”

Next, he says, other energy-related solutions are also needed. “For a business to be truly energy efficient, it should review its total power use and develop a holistic energy efficiency strategy.”

De Waal adds that getting these services from a single provider is advantageous.  

In closing, De Waal says there is a serious need for government to review the limits that it has placed on independent energy generation.

“The country’s economy is underperforming and the agri-sector cannot afford to lose money on needlessly expensive energy tariffs. We believe that if Nersa does away with the 1 MVA cap, it will allow these operations to become more self-sufficient, lower the cost of their products and increase employment significantly.

“However, until that happens, we would encourage all agribusinesses to partner with service providers who have a proven record of finding innovative solar energy solutions that reduce their clients’ monthly electricity spend,” he concludes.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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