The Western Cape government, through its Finance and Economic Opportunities Minister David Maynier, has submitted comments to the Department of Mineral Resources and Energy (DMRE) to amend Schedule 2 of the Electricity Regulation Act to increase the licence-exemption cap for embedded generation plants.
Currently, the licence-exemption threshold is 1 MW and there have been calls from various industries to lift the threshold to 50 MW.
This followed the release of a study by Meridian Economics, which found that up to 5 000 MW of additional generation capacity could be unlocked in the near term if the threshold was raised to 50 MW.
Mineral Resources and Energy Minister Gwede Mantashe has, however, insisted that the threshold will only be increased to 10 MW.
Maynier too is proposing that the threshold be lifted to 50 MW.
He also asks for all generation facilities to be exempt from licensing under the new proposed threshold.
“Increasing the licensing threshold for embedded generation to 50 MW or higher, and simplifying and finalising the registration process would provide certainty to investors and increase access to affordable, renewable energy in South Africa,” says Maynier.
He points out that South Africa is in an energy crisis – a problem which could be eased with large-scale private sector participation in energy generation, done in partnership with government.
In addition, Maynier says further clarity is needed on the potential role of municipalities and the role of the private sector as electricity generators and distributors of renewable energy to residents and businesses, particularly as it relates to energy trading opportunities under the proposed amendments.
“This clarity will be critical to the success of our Municipal Energy Resilience Project, which seeks to support municipalities to take advantage of the energy regulations to generate, procure and sell their own power so that we can become more energy secure in the Western Cape,” he says.
The renewable energy sector in South Africa has the potential to attract much-needed investment and creates jobs, with the proposed amendments being a “step in the right direction”, says Maynier.
However, he urges Mantashe to ensure that the proposed amendments to the Electricity Regulation Act simplify the current regulatory challenges to unlock these opportunities.
Maynier, on May 21, visited a 1.3 MW solar photovoltaic plant at Old Mutual Park, in Cape Town, which provides about 10% of the commercial complex’s energy needs.
“[This plant] demonstrates how the built environment can be adapted to help companies cut their energy costs, become more energy secure and reduce their carbon emissions. This solar plant is one of the reasons that Old Mutual was awarded a 6-star green rating by the Green Building Council of South Africa,” he points out.
Maynier says the visit also provided him a platform to hear directly from representatives of Kigeni Energy and the SOLA Group – two companies involved significantly in renewable energy development in South Africa – about how the opportunities for growth in the renewable energy sector are being hindered by the current limits and by the “complex and onerous” regulations application process.
“During my visit, I was informed that the plan is to expand the Old Mutual solar plant to 4.9 MW; however, due to the unclear and onerous process to register with the regulator, it has taken the developers more than a year to try and obtain a licence and they are still waiting,” he says.
Projects like the Old Mutual solar plant are a “great example” of how private sector investment in renewable energy infrastructure can help to mitigate the medium-term impacts of load-shedding and create jobs and grow the economy in the Western Cape, Maynier enthuses.
As such, the Western Cape government urges Mantashe to implement its proposed changes, increase the limit to at least 50 MW and decrease red tape within that threshold.