#SONA2020

Municipalities can buy their own alternative power

By Karabo Mafolo 14 February 2020
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Amid the inconvenience of persistent load shedding, President Cyril Ramaphosa announced a shift in how energy can be purchased that reduces the dependence on Eskom. 

“The load shedding of the last few months has had a debilitating effect on our country. It has severely set back our efforts to rebuild the economy and to create jobs.” 

This is what Cyril Ramaphosa told South Africans at the State of the Nation (SONA) address on Thursday night.

Ramaphosa announced that “a Section 34 Ministerial Determination will be issued shortly to give effect to the Integrated Resource Plan 2019, enabling the development of additional grid capacity from renewable energy, natural gas, hydropower, battery storage and coal”. 

Ramaphosa says that the government will “initiate the procurement of emergency power from projects that can deliver electricity into the grid within 3 to 12 months from approval”.

He did not give timelines as to when the Section 34 ministerial determination would be issued. When it is in place, it would allow municipalities to buy electricity from independent power producers. This also means that municipalities will be able to determine what kind of electricity they want to use.

According to Section 34 of the Energy Regulation Act of 2006, the Minister of Energy in consultation with the National Energy Regulator of South Africa (Nersa) has the power to determine that new energy generation capacity is needed to ensure that citizens are provided with uninterrupted power.

Section 34 also allows the minister to determine how much energy can be sold and the type of energy to be sourced. 

Up until the announcement by Ramaphosa,  municipalities were required to get Section 34 declarations in order to procure energy from independent power producers.

The DA-led City of Cape Town had already approached the courts in a bid to source power from alternative producers. 

In May 2020 the City of Cape Town was set to be in the Western Cape High Court to request to purchase power from independent power producers (IPPs) without a Section 34 determination. 

In 2015 the City of Cape Town asked the then minister of energy Tina Joemat-Pettersson for a Section 34 determination that would allow the city to purchase 50MW of solar energy and 280MW of wind energy from independent power producers (IPPs). The city then took the matter to court.

Responding to queries from Daily Maverick on Friday, City of Cape Town mayor Dan Plato said the city “cautiously welcomes the firmest commitment” given by the President, but that they need “urgent clarity on the legal and regulatory nuts and bolts of how this must happen”.

In a statement released, DA MP Ghaleb Cachalia called for Ramaphosa to “immediately drop his government’s opposition to the court case”. Cachalia also wanted Ramaphosa to clarify three things: “how he is going to deal with an obstructionist stance from the alliance partners, who have been adept at opposing all restructuring plans? Will he clearly issue a rejection of Cosatu’s financing plan? And when will Eskom begin unbundling?”

Ramaphosa also announced that the National Energy Regulator of South Africa would continue to register “small-scale distributed generation for own use of under 1 MW, for which no licence is required”.

While previously IPPs were frustrated by the length of time it took to get their IPPs up and running because of the paperwork, Ramaphosa announced that all the applications by commercial and industrial users to produce electricity for own use above 1MW will be processed within the prescribed 120 days. “It should be noted that there is now no limit to installed capacity above 1MW,” said Ramaphosa.

Commenting on the announcement, Bertha Dlamini, the president of African Women in Energy and Power, an initiative she founded to accelerate women’s participation in the energy sector, said the President’s announcement of the pending ministerial declarations “opens a world of opportunities for women and youth in energy and power, who should not be left behind as South Africa gears up for a truly diversified energy mix. The sooner the timelines are announced the better”.

“Without a deliberate effort to include women entrepreneurs and the youth, this brilliant move will fail to realise the socio-economic benefits that it promises for South Africa and its citizens,” said Dlamini. DM

 

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