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Schedule 2 of Electricity Regulation Act Republished

October 8, 2021

Department of Mineral Resources and Energy

The mineral resources and energy department has republished the amendment to Schedule 2 of the Electricity Regulation Act.

The amendment of Notice 737 published in August 2021 was published in Government Gazette 45266.

The amendment to Schedule 2 of the act increases the National Energy Regulator’s (NERSA) licensing threshold for embedded generation projects from 1 MW to 100 MW.

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.

The republished version contains reference to the Annexure, Schedule 2 and exemption from obligation to apply for and hold a licence; the addition of 1.10 “point of connection”; the addition of 1.11 “property”; addition to 2.3 on the Regulator prescribing the manner in which the distributor shall keep a register of each facility; the addition of 3 on the activities exempt from the requirement for a licence and the addition of 3.5.1 and 3.5.2 on the trading of electricity by a reseller.