South African energy crisis: the practical implications of the government’s proposed interventions

President Ramaphosa announced that Eskom is taking active steps to add new generation capacity to the grid on an urgent basis. The following noteworthy steps are proposed in order to procure new generation capacity:As an immediate measure, Eskom will buy surplus capacity from existing independent power producers , mines and other private entities which generate excess power. This will be beneficial for entities that have built projects with excess capacity which can be sold to Eskom.

Any change to the Bid Window 5 local content requirements may be subject to legal challenge by unsuccessful bidders on the basis that it results in the procurement process being unfair because it benefits the preferred bidders to the detriment of both unsuccessful bidders or entities that failed to submit a bid as a result of the specified onerous local content requirements.

President Ramaphosa has announced that the generation capacity to be procured through REIPPPP Bid Window 6 will be doubled from 2,600 MW to 5,200 MW. This significant increase in the Bid Window 6 generation capacity raises some practical issues: If a cross border project is intended prior to the enactment of new legislation, then there must be due regard of the requirements in regulations 6 and 8 of the Electricity Regulations on New Generation Capacity .

The reference to “embedded generation” by the President creates some uncertainty because it is a term that is understood differently in different contexts. For example, it is not clear whether wheeling projects are included or not within this term. Expansion of Eskom power lines and substations without needing to get environmental authorisation in areas of low and medium sensitivity and within the strategic electricity corridors.

Environmental and land consents, e.g. environmental authorisations, water use licences, heritage consents, agricultural consents, building plan approvals etc.; Appeals and review proceedings, including how objections and appeals can be dealt with in an expedited manner.The government has acknowledged the potential for households and businesses to install rooftop solar solutions and to connect this power to the grid. To incentivise greater uptake of rooftop solar, Eskom will develop rules and a pricing structure, known as a “feed-in tariff”, for all commercial and residential installations on its network.

This is something which is self-evidently open to abuse and has the potential to be a vehicle for corruption and looting of this increased budget allocation. It remains to be seen what structural mechanisms will be put in place to ensure that the by-passing of the ordinary processes, with their associated protections, does not result in abuse.

Source: Energy Industry News (energyindustrynews.net)

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