Business organisation the National Employers' Association of South Africa (Neasa), in its comments on the proposed amendments to Schedule 2 of the Electricity Regulation Act (ERA), called for the liberalisation of electricity generation up to 50 MW.
It also called for wheeling and for definitions to be updated to clarify renewable plus storage project limits.
Neasa says it believes the amendment presents an opportunity to make further changes, simplifications and clarifications to Schedule 2, which should be taken to modernise, streamline and provide clarity of the intentions of government in respect of self-generation, embedded generation, distributed generation, wheeling and trading activities.
"There is much that can and should be done by the Department of Mineral Resources and Energy (DMRE) and the National Energy Regulator of South Africa (Nersa) in the area of electricity policy and regulatory reform that would make a significant difference to load-shedding and power interruptions in South Africa in the short term at no cost to the fiscus," the organisation said.
All grid-connected, embedded and distributed generators are already required to comply with the grid code, and to be certified and authorised by Eskom or the relevant municipal electricity distributor as compliant, before registration with Nersa.
"It should be noted that the 10 MW licensing threshold proposed by the DMRE in the new draft amendment to Schedule 2 is completely arbitrary, without any basis or substantiation, and may just as well be 50 MW or higher," Neasa asserts.
This would also serve to increase electricity supply quickly in South Africa at no cost to the fiscus, diversify electricity supply in order to mitigate the risk of over-dependence on Eskom and municipal electricity distributors, relieve electricity supply constraints on the economy, reduce costs and facilitate job creation and economic growth.
Neasa's member companies and associate members, which collectively employ about 500 000 people, have an electricity demand greater than 100 kW, typically between 100 kW and 10 MW, and some have an electricity demand greater than 10 MW.
"While few members of Neasa would themselves have a need to install grid-connected distributed, embedded or self-generation facilities above 10 MW, Neasa strongly supports removing all unnecessary generation licensing burdens for generation installations up to at least 50 MW."
"Neasa members face major problems with respect to electricity supply disruptions caused by capacity shortfalls by Eskom, unplanned power outages owing to distribution system infrastructure equipment failures in municipal electricity distribution networks and indiscriminate load reduction imposed and used as a lever to get municipalities and customers to pay Eskom.
"These problems are proving disruptive to the operations of Neasa members and associate members with associated loss of revenue, productivity and jobs, and an inability to grow and adequately serve South Africa’s needs for economic recovery and growth following the Covid-19 pandemic," the organisation states.
Neasa members have already installed stand-by generators, uninterruptible power supplies for critical equipment and battery systems for office equipment and lighting, at significant cost and as non-value-adding investments, as well as grid-tied solar photovoltaic (PV) systems, as well as grid-tied solar PV and energy storage systems.
The organisation says more can, should and is being done by its members to alleviate the disruptive situation, provide solutions to these challenges and to take ownership of their own energy futures.
"Members are ready and willing to make further investments in this regard. Neasa, therefore, urges the DMRE to unlock the potential for members to become part of the electricity supply solutions in South Africa by updating and modernising restrictive regulations which serve to inhibit such investments."
The draft amendment to Schedule 2 is not specific regarding the treatment of energy storage, despite the increasing role of energy storage in most distributed, embedded and self-generation installations, it says.
Neasa avers that energy storage should not be considered as a generation source, as it fulfils a dual function, namely that it can act as load during low demand and a source of stored energy during high demand. Energy storage cannot generate nett energy itself, and needs to be charged from an energy source before it can release energy as and when required, and is indeed a net consumer of electricity.
It should be noted that, in operating a combined solar PV and energy storage installation, a portion of a solar installation is used to charge the energy storage system, while the energy from the storage system is released to smooth the solar PV output and extend the generation output from the installation when the sun is not shining or inadequate to meet demand.
The organisation, therefore, recommends that the draft amendment to Schedule 2 be amended such that, in case of renewable energy generation used in combination with energy storage, the capacity toward the 10 MW generation capacity threshold should apply to the invertor capacity at the point of connection.
This would provide clarity and would allow energy storage to play a major role within the economic recovery of South Africa, it argues.
Further, Neasa supports the opening up of distribution and transmission networks to the wheeling of power from distributed generators to off-takers, in one-to-one, one-to-many, many-to-one and many-to-many wheeling configurations between both related and unrelated parties. This will facilitate the uptake of distributed generators, relieve Eskom of a demand that it is unable to meet and reduce load-shedding.
"One-to-many wheeling arrangements will also necessitate larger distributed generators that may exceed the 10 MW threshold proposed by DMRE in the draft amendment to Schedule 2. This is more reason to increase the generation licensing threshold to at least 50 MW, so as not to impede one-to-many wheeling configurations through unnecessary generation licensing burdens for distributed generation installations above 10 MW," the organisation says.
It also supports the opening-up of trading of electricity by new entrants into the electricity supply industry for this purpose and to facilitate a competitive, diversified, retail electricity sector to small and medium-sized companies and end-customers, which represent the majority of Neasa's direct and associate members.
"Electricity trading requires a separation of the network, or wires, services provided by Eskom and municipal electricity distributors from retail electricity sales. Electrical energy can then be procured in bulk by aggregators and retail electricity traders from Eskom, municipal electricity distributors and/or independent power producers, and sold in innovative arrangements and bundled with other retail services to meet the needs of specific end-user market segments."
"Neasa believes Schedule 2 must precisely clarify government's intentions in respect of generation for own-use, self-generation, embedded generation, distributed generation, cogeneration, wheeling and trading, what is allowed and what is not allowed, and the requirements to be met for the different installation options that are allowed.
"The draft amendment leaves many aspects unclear and open to different interpretations and such uncertainty will delay and inhibit the uptake of self-generation, embedded generation, distributed generation, wheeling and trading in South Africa, which will further impede security of supply, jobs, investment and economic growth," Neasa states.
The removal of uncertainties will enable a more rapid uptake of compliant self-generation, embedded generation, distributed generation, energy storage installations for use both on-grid and off-grid, on-site and off-site, and for own-use, wheeling and trading applications, between related and unrelated parties, the organisation notes.