Private Power Generation – What do changes to the 100MW threshold mean for the South African economy?

 Private Power Generation – What do changes to the 100MW threshold mean for the South African economy?

Private Power Generation – What do changes to the 100MW threshold mean for the South African economy?

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Overview

Following South Africa being bombarded by rolling power outages in the last few weeks, President Cyril Ramaphosa announced on Thursday that there would be a 100-Megawatt cap for embedded power generation. Where policies are concerned, this shift is a vital move towards power generation that will fall outside the scope of that provided by South African power utility, Eskom, which has the additional option of sending surplus power to the national grid. However, where the politics are concerned, it is considered a large ‘slapdown’ where the
Department of Mineral Resources and Energy is concerned, digging in at a 10MW threshold instead of the minimum 50MW business expected.

What can South Africa expect from these changes?

Ramaphosa has also said that the new regulations will be gazetted within the next 60 days, exempting embedded generation projects up to a maximum of 100MW from the application process required from the National Energy Regulator of South Africa (NERSA).

With the new regulations, private companies and industries will be able to build their own energy facilities that will cater specifically to their unique and individual needs, including the creation of several opportunities for producers to wheel energy. This is expected to play a vital role in the reconstruction and the recovery of the South African economy.

Ramaphosa has also added that if the energy crisis is addressed swiftly and comprehensively, it can determine the pace of economic recovery. If the energy supply shortfall is resolved and the risk of load shedding can be reduced, the single and most important objective in reviving South Africa’s economic growth will have been achieved.

Even though there are several challenges that lay ahead, especially on the political front, Cosatu has, thus far, seemed to approve of the new plans that are in motion. When the announcement was noted, the labour federation admitted that it had hoped that the announcement would “spur investment in additional power generation”.

However, Cosatu was disappointment that there were no immediate measures implemented that could handle the present crisis involved with rolling power outages.

There is still a way to go before the changes are implemented, and there are many that believe that the announcement is not enough proof of the government’s commitment towards resolving the energy crisis; however, it represents the willingness of the government to embrace deregulation.

Liezel Thorne

Liezel is a content writer with a passion for writing about the financial industry and corresponding markets. Her favorite topics include Forex, Stocks and Indices, Cryptocurrencies, and anything relating to trading technology – news, newest and latest tips, tricks, and trends. She has done extensive reviews on brokers, trading platforms (web, desktop, and mobile), and various other concepts involved with trading. As a student of Environmental management, she has a keen interest in geography, environmentalism as well as conservation of both fauna and flora.

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