Picture 123RF
Picture 123RF

The latest steps to empower renewable energy producers are good news. While enabling solar power generation plants to take root all over the country might seem an obvious solution to SA's energy shortage given our sunny climate, there are various intricacies involved. Therefore, the urgency that now seems to be fuelling this progress should be welcomed.

On top of releasing the names of the eight preferred bidders, including three “power ship” projects selected as part of government’s 2,000MW emergency procurement programme, and announcing the much-anticipated fifth bid window (BW5) for the procurement of additional wind and solar energy, mineral resources and energy minister Gwede Mantashe also announced that the licence exemption cap for independent producers will be raised from 1MW to 10MW.

This contrasts with growing calls for the licence-exemption threshold for distributed projects at mines, smelters, factories and farms to be increased to 50MW. The thinking is that a liberalisation of the country’s convoluted licensing regime is the cheapest and fastest way to unlock at least 5,000MW of new capacity within five years.

The logic makes sense. Nonetheless, 10MW is a step in the right direction as it will empower more independent producers to enter the playing field. Furthermore, many businesses use more than 1MW per site.

In his speech Mantashe explained that the 10MW cap is useful as long as the electricity is consumed on-site and does not require wheeling through the network. As a consequence, unless a sizeable battery storage solution is also installed a consumer’s total demand would not be fully supplemented. However, as a result of the increased cap a far larger portion of their daytime load could be supplied from solar, resulting in a far higher overall renewable supply penetration. 

Despite the positive benefits of the increased cap, the licence granted by the National Energy Regulator of SA is not the only approval required in the establishment of a grid-tied system. There is still a connection application required for all systems, regardless of size, to connect to the local electricity distributor’s network, of which Eskom supplies about 60%-70% directly, with municipal electricity suppliers making up the balance.

Consequently, despite the best intentions of lifting the cap, the efficiency and speed of the connection process needs to be urgently addressed to allow for the rapid intended uptake of renewables from the increasing of the cap.

As an example, the approval process required to connect a solar plant to an Eskom site is supposed to take an initial 90 days with the issuance of the initial cost estimate letter and then a further 90-180 days to finalise the budget quote if additional works are required for the connection. This indicates a potential nine month process. This is, however, rarely the case, with most applications taking far longer.

The process is hugely inefficient from both an administrative and technical point of view given the relatively small connection sizes. This slow procedure is a major hurdle to the progress that the lifting of the exemption is designed to achieve.

While the need for a connection application is appreciated, the onerous and lengthy nature of the process is an impediment to the progress of embedded solar generation project capacity development. Therefore, while it is certainly positive that the cap will be raised, this must be accompanied by a streamlined connection processes to have the desired effect. The more independent, renewable energy providers that can be empowered, the sooner SA can reach a position of energy security.

Eskom CEO Andre de Ruyter is known to support further regulatory reform based on the need to close what is estimated to be a 4,000MW national supply deficit. Experts predict that this shortfall will persist for the coming five years and leave the country vulnerable to load-shedding even once Eskom has improved the reliability of its fleet through its maintenance campaign.

• Masureik is CEO of New Southern Energy.

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