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Schedule 2 of Electricity Regulation Act Amended

August 13, 2021

Department of Mineral Resources and Energy

Schedule 2 of the Electricity Regulation Act has been amended increasing the National Energy Regulator’s (NERSA) licensing threshold for embedded generation projects from 1 MW to 100 MW.

The mineral resources and energy department published the amended Schedule 2 in Government Gazette 44989.

In June 2021, president Ramaphosa announced that Schedule 2 would be amended.

During a media briefing at the time, the president emphasized that South Africa’s ability to address the energy crisis swiftly and comprehensively will determine the pace of our economic recovery.

“Resolving the energy supply shortfall and reducing the risk of load shedding is our single most important objective in reviving economic growth”, he said.

The president added that the amendment of Schedule 2 “reflects our determination to take the necessary action to achieve energy security and reduce the impact of load shedding on businesses and households across the country”.

“The amended regulations will exempt generation projects up to 100 MW in size from the NERSA licensing requirement, whether or not they are connected to the grid. This will remove a significant obstacle to investment in embedded generation projects”, he said.

According to the president, generators will also be allowed to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with Eskom and relevant municipalities.

In order to ensure orderly development of the energy system, municipalities will have discretion to approve grid connection applications in their networks based on an assessment of the impact on their grid.

They will also have to undertake an Environmental Impact Assessment.

The president declared that the reform is expected to “unlock significant investment in new generation capacity in the short and medium term, enabling companies to build their own generation facilities to supply their energy needs”.

“This in turn will increase the available supply of energy and reduce the burden on Eskom, allowing Eskom to proceed with its intensive maintenance programme and reduce its reliance on expensive gas and diesel turbines”, he said.

Generators will need to register with NERSA.