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Regulations on Power Generation by Municipalities in the Pipeline

February 21, 2020

Department of Mineral Resources and Energy

Regulations governing how municipalities can procure or develop their own power generation are being drafted.

The mineral resources and energy minister, Gwede Mantashe, confirmed this during the 2020 State of the Nation Address (SONA) debate in the national assembly.

According to the minister, the draft regulations will require, inter alia, that municipalities meet certain criteria such as alignment to the Integrated Resource Plan (IRP) 2019 and all other applicable laws; good financial standing; demonstrate diversity in the customer base; compliance with the Municipal Finance Management Act and approval from national treasury under the Public Finance Management Act and Treasury Regulation 16.

The minister also announced that Section 34 Determinations to implement the IRP 2019 are finalised and await concurrence by the National Energy Regulator (NERSA).

“This will also enable opening of Bid Windows for the renewable energy power procurement and support further investment in the sector.”

As regards the Request for Information (RFI) on power projects that can come on stream in the shortest possible time issued in December 2019, the minister indicated that “four hundred and eighty-one (481) responses, which include energy supply options and Demand Side Management options for Gas, Liquid Fuels, Coal, Renewables, Storage and Nuclear” have been received.

The minister pointed out that preliminary analysis indicates that some proposals could bring power to the grid within two years.

He confirmed that the Section 34 Determination for emergency power procurement has been drawn up and awaits concurrence by NERSA.

In terms of the removal of the licensing requirements for generation for own use in a certain category of generation facilities under one megawatt, NERSA has received one hundred and thirty-two applications in this category, with a total capacity of fifty-nine megawatts.

The minister also announced that South Africa faces at least two years of load shedding as “Eskom is unable to reliably meet any peak electricity demand above thirty-one thousand megawatts (31 000 MW)”.

As regards the sovereign wealth fund mentioned during the SONA, the minister indicated that a proposal on a sovereign wealth fund to be created through royalties from mineral resources is contained in the Draft Upstream Petroleum Resource Development Bill.