A total of 29 South African municipalities have already approved tariff frameworks for small-scale embedded generation (SSEG), with 282 MW of mostly rooftop solar capacity having been formally integrated into municipal networks, the South African Local Government Association (Salga) reports.
The actual figure is likely to be significantly larger, but many SSEG facilities have not been registered with either a municipality or the regulator.
Speaking during the virtual Solar Power Africa conference on Monday, Salga’s head of electricity and energy, Nhlanhla Ngidi, reported that the majority of these connections were currently located in the Western Cape and Gauteng provinces, but that a number of other municipalities have SSEG administrative processes in place.
He said that local government had accepted the inevitability of the energy transition and the fact that the landscape for electricity supply would become increasingly decentralised and competitive in future, as the monopoly utility model made way for a multi-buyer system.
Salga was convinced that there were substantial benefits to be gained by integrating solar photovoltaic (PV) into municipal networks. These benefits ranged from the potential to secure clean energy at a cost that was either equal to or below the Eskom tariff, to the release of unused municipal land for energy production, which could support local economic development, as well as enterprise and job creation.
Ngidi said recent regulatory changes opening the way for municipalities to procure electricity from independent power producers (IPPs) were also viewed as positive by local government administrations.
In October, Mineral Resources and Energy Minister Gwede Mantashe gazetted amendments to the electricity regulations, opening the way for “municipalities in good financial standing to develop their own power generation projects”. The Gazette notice amended the Electricity Regulations on New Generation Capacity in terms of Section 35(4) of the Electricity Regulation Act (ERA), of 2006.
Ngidi said much discussion was still required to understand the implications of the new regulations, including what the term “good financial standing” meant in practice.
Further definition was also required on the procurement models that could be used by municipalities, including whether both bilateral power purchase agreements and public-private partnerships could be pursued.
Salga saw immediate scope for municipalities to absorb a portion of the allocation made in the Integrated Resource Plan of 2019 (IRP2019) for both utility-scale solar PV, as well as the 500 MW yearly allocation for distributed generation, most of which was also likely to arise in the form of solar PV.
Council for Scientific and Industrial Research (CSIR) Energy Centre principal researcher Dr Jarrad Wright also saw municipal consumers playing a role in closing South Africa’s immediate electricity supply gap, which manifested itself periodically in the form of load-shedding.
He reiterated the CSIR’s view that the risk of load-shedding would persist for a few years yet, largely owing to the underperformance of Eskom’s coal fleet and the tracking of the energy availability factor (EAF) well below the utility’s 70% target.
During 2020, which has been South Africa’s most intensive year yet for load-shedding, with 1 734 GWh shed to date (despite a big lockdown-induced slump in demand in March and April), the fleet’s EAF has fallen to 66.9%.
Wright argued that “customer response at scale”, including in the form of residential rooftop solar, provided the best near-term opportunity for reducing the risk of ongoing rotational cuts.
This could be facilitated by a further easing of licensing restrictions beyond those that had already been announced by the National Energy Regulator of South Africa (Nersa).
In October, Nersa eventually confirmed that Mantashe had approved, in February, that it was allowed to process licence applications for self-generation facilities of above 1 MW, even if they were not in compliance with the IRP2019.
However, all facilities above 1 MW in size still required a licence, while those below 1 MW should register with Nersa. Several commentators have argued for the licensing threshold to be lifted to at least 50 MW to facilitate larger self-generation investment at mines, factories and farms.
Wright estimated that residential SSEG could contribute 125 MW to 200 MW of new energy yearly, while SSEG facilities across the private sector, mostly in the form of solar PV, could add 100 MW to 750 MW yearly.
Solar PV was also likely to be the dominant technology deployed on a larger scale, at times involving wheeling, by mining and industrial groups, several of which had advanced procurement programmes of their own.
To address South Africa’s current energy and capacity shortages, however, customer-response at scale would have to be pursued in parallel with completing Eskom’s build programme and the existing IPP projects, as well as the initiation of new procurement programmes by the IPP Office.
This included the 2 000 MW Risk Mitigation Independent Power Producer Procurement Programme and the implementation of the IRP2019, including the launch of the fifth bid window of the Renewable Energy Independent Power Producer Procurement Programme.
“This is a crisis. To address it we need to get capacity under construction on line, recover Eskom plant performance and implement all steps outlined with urgency.”