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Schedule 2 of Electricity Regulation Act to be Amended

June 11, 2021

The Presidency

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

President Ramaphosa announced this during a media briefing today.

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.

The mineral resources and energy department will publish the final version of the amendment to Schedule 2 within the next 60 days or sooner.