Energy News — 01 December 2014

The continued pressure on South Africa’s electricity system is leading businesses and industry to consider what further steps can be taken to ensure much needed electricity supply security.

The South African government has planned and embarked on large scale procurement programmes in order to address the generation needs of the country, including the 18 GW Renewable Energy, 7.6 GW Base-Load (Coal, Gas and Imported Hydro), 1.2 GW Medium Term Risk Mitigation Strategy (cogeneration & natural gas) and 9.6 GW Nuclear programmes. This in line with the nearly 40GW of new generation expected to be online by 2030. The large scale of these programmes means that implementation is phased and will necessarily take time before the full benefits filter through to end users.

In light of the recent strain on the South African grid, with a real possibility of the country being forced to endure rolling blackouts, “load shedding”, as was the case in 2008, corporates and energy intensive users alike are having to consider short term solutions in order to continue and grow their operations.

Distributed generation (i.e.embedded generation) has been discussed in the South African market for some time now, though the importance and urgency thereof has been eclipsed by the successful Renewable Energy Independent Power Producer Procurement Programme (through which 4GW of electricity has been procured from renewable energy sources since 2011).

The early stage appeal of distributed generation for commercial and industrial users (either through roof-top solar installations or larger solar parks for big industry) hinged on the fact that users could generate clean energy at cost comparable rates to that of state utility Eskom’s “dirty energy”. Recent circumstances however have seen the priorities of distributed generation shift from cost effective clean energy to one of electricity supply security.

The shortfall in Eskom’s generation capacity, as well as limits on the transmission grid, leaves the path wide open for distributed generation as any effective short term solution to the current state of affairs. There are however barriers to opening up the market to widespread distributed generation, these include the lack of a workable regulatory framework and the absence of a clear plan for net-metering. These issues are however being addressed by the National Energy Regulator of South Africa, at the urging of key industry bodies.

Source: Lexology

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