JONATHAN BEHR AND ROBYN HELLING: Draft power transmission rules vital to alleviating grid constraints

SA’s energy sector is on the cusp of transformation. 

On April 3 the department of energy & electricity gazetted the draft Electricity Transmission Infrastructure Regulations, a pivotal step towards addressing grid constraints and boosting energy security. 

The regulations aim to facilitate private sector involvement in building new transmission infrastructure, aligning with a recent ministerial determination to establish 1,164km of power lines by August 2029.

This initiative, yielding 3,222MW of new capacity, signals a bold move to modernise SA’s electricity landscape and drive economic growth.

A strategic response to energy challenges

The regulations, grounded in section 34 of the Electricity Regulation Act of 2006, empower the minister of electricity & energy to mandate new transmission infrastructure in emergencies and market failures, or to ensure energy security. This authority, exercised after consultation with the National Energy Regulator of SA (Nersa) and the finance minister, allows for flexible interventions to meet national needs.

The recent determination, announced on March 28, targets strategic corridors in the Northern Cape, the North West and Gauteng, addressing bottlenecks that have long hindered renewable energy integration.

SA’s transmission grid, largely managed by Eskom, has struggled to keep pace with growing demand and the shift towards renewables. Coal dominates the energy mix, contributing about 70% of installed capacity, while renewables account for just 9%.

The regulations aim to unlock private investment to expand transmission capacity, supporting the country’s commitment to a greener, more competitive electricity market as outlined in the Electricity Regulation Amendment Act of 2024.

Key provisions of the regulations

The regulations outline a structured framework for procuring and establishing transmission infrastructure, emphasising private sector participation. Key provisions include:

• Infrastructure specifications — the minister can define the nature, type and extent of required infrastructure, including whether it will be owned, managed or operated by state or private entities.

• Procurement processes — the regulations detail how procurement will be conducted, with the department of electricity & energy or a designated entity acting as the procurer. A “late-stage tender” approach ensures government handles preliminary issues such as servitudes, environmental assessments and licensing, reducing risks for private investors.

• Buyer and user roles — designated buyers or users, often state entities such as the National Transmission Company SA, are bound by the determination to purchase or use the infrastructure or electricity, ensuring seamless integration into the grid.

• Energy infrastructure projects — the regulations allow for multicomponent projects combining new generation capacity, transmission infrastructure and related systems such as gas infrastructure, to maximise efficiency.

• Cost recovery — Nersa is tasked with ensuring buyers recover costs, including capacity payments, expropriation expenses and administrative fees, through approved tariffs. Buyers can request cost recovery assurance letters to confirm recoverable costs before entering transmission service agreements.

The provisions aim to streamline processes, enhance reliability and promote consistency in infrastructure development, addressing structural constraints that have impeded progress.

Incentivising private investment

The ministerial determination and regulations are designed to attract private capital by mitigating risks. The government’s commitment to handling early-stage hurdles — such as securing land rights and environmental approvals — creates a more predictable environment for investors.

The Independent Transmission Providers Programme, launched on April 1, targets 3,222MW of new capacity by 2029, with a request for qualification planned for July 2025 and proposals by November 2025. This pilot project, supported by the Independent Power Producer Office’s December 2024 request for information, mirrors successful private sector engagement in renewable energy generation.

Private investment is critical to overcoming SA’s grid limitations, which have constrained renewable energy projects, particularly in resource-rich regions such as the Northern Cape. By fostering public-private collaboration the regulations align with President Cyril Ramaphosa’s vision, articulated in his 2025 state of the nation address, of a competitive electricity market that mobilises private sector expertise to enhance energy security and economic growth.

Navigating deviations and consultations

The regulations allow the minister to deviate from the Integrated Resource Plan (IRP) or Transmission Development Plan (TDP) in emergencies or for national interest, provided such deviations are justified. Factors considered include urgency, feasibility and infrastructure requirements.

Public consultation is mandated unless impractical, with notices detailing the rationale and scope of proposed deviations. The minister must submit proposed determinations to Nersa and the finance minister, who have 30 days to provide feedback, ensuring robust oversight.

This flexibility is crucial for addressing urgent grid constraints but raises concerns about ministerial discretion. Clear criteria for deviations and transparent consultation processes will be essential to maintain investor confidence and avoid perceptions of arbitrariness.

Implications for SA’s energy future

The regulations mark a significant shift from Eskom’s historical monopoly towards a hybrid market model. By enabling private sector participation in transmission infrastructure, they pave the way for increased renewable energy integration, supporting SA’s Paris Agreement commitments to peak emissions by 2025 and decline thereafter. The focus on cross-border transmission capacity, backed by international agreements, could also enhance regional energy co-operation.

However, challenges remain. The regulations do not apply to the Transmission System Operator state-owned company, which must be established by 2029, potentially creating transitional complexities. Additionally, the success of the Independent Transmission Provider depends on effective execution and investor trust, which could be undermined by regulatory delays or inconsistent policy signals.

A call to action

Stakeholders must engage with the regulations to ensure they balance flexibility with accountability. The pilot programme offers a test case for public-private partnerships in transmission infrastructure, with implications for SA’s energy security and economic competitiveness. By addressing grid constraints and fostering innovation, these regulations could unlock a new era of sustainable growth, provided implementation is transparent and inclusive.

• Behr is a director, and Helling a candidate attorney, at Werksmans Attorneys.