The government's decision to allow private companies to generate their own electricity of up to 100MW can unlock significant investment while helping mitigate the effects of Eskom's power struggles.
That is the view of the Nelson Mandela Bay Business Chamber and other local experts who believe yesterday's announcement by President Cyril Ramaphosa would benefit the metro significantly.
At a media conference, Ramaphosa confirmed schedule two of the Electricity Regulation Act would be amended to allow energy regulator Nersa to increase the private electricity generation threshold from 1MW to 100MW.
This means energy self-generation projects of less than 100MW would no longer have to go through drawn-out Nersa licensing projects.
Ramaphosa said the finalised amendments on self-energy generation would be published in the next 60 days.
He made the crucial announcement during a week in which Eskom plunged the country into stage three load-shedding, much to the frustration of business operations and the public.
“This intervention 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,” Ramaphosa said.
He said beyond the generation of power for their own use, companies would be allowed to sell excess electricity to the national grid.
The move would present consumers with “price competitive offerings and enhance efficiencies so every generator is then kept on their toes to make sure they offer the best service”.
Municipalities, Ramaphosa said, would “have discretion to approve grid connection applications in their networks” based on environmental impact assessments.
Bay business chamber chief executive Denise van Huyssteen said the government’s decision would have positive spin-offs in terms of job creation and potentially help reduce the city’s high unemployment rate.
“The president’s announcement comes at a time when South Africans and the business sector are battling rolling power outages which are a threat to livelihoods and costly disruption to business operations and their sustenance,” she said.
“It has also had costly ramifications for the local economy which is slowly recovering from the impact of the Covid-19 shutdown.”
Ramaphosa, Van Huyssteen said, had highlighted that power generators would also be allowed to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with Eskom and relevant municipalities.
“We welcome and encourage growth in this sector, and support business initiatives in renewable energy development.
“The metro is positioning itself as the energy hub of SA, hosting a basket of strategic energy projects in the region.”
Bay energy consultant Peter Neilson said the announcement was huge.
“South Africa has always had a regulated energy market but this announcement has blown that model out the window.
“We are fast approaching deregulated electricity generation,” he said.
“This makes way for investment and competitive prices.
“We can build an energy market and address the crisis we are facing.
“For the president to make this announcement the situation must be extremely serious, even worse than we imagined.
“This could be Eskom’s death spiral.”
NMU economics professor Charles Wait said last night the announcement could not have come at a more critical time for the metro and country.
“Business has been calling for this for a long time already, particularly the mining sector,” Wait said.
“I don't know what procedures they'll use to get this through, but my hope is that they speed this up.
“It's still going to take some time for businesses to get their plants equipped with this, so the sooner they can do it the better.”
Wait had heard some criticism of the plan from some politicians, but at the end of the day it was a practical solution, he said.
The DA's Kevin Mileham said the party would put pressure on the government to ensure it stuck to the deadline announced by Ramaphosa of publishing the final amendments to schedule two in the next 60 days.
Mileham said the DA hoped this was not a government ploy to save face while SA endured debilitating load-shedding.
“It must be stressed that this simply cannot be one of the president’s trademark empty promises to save face in light of Eskom’s announcement of stage 3 and 4 rolling blackouts this week.”
Labour Federation Cosatu also welcomed the announcement, but said “it will not resolve the level four load-shedding decimating the economy today”.
Cosatu said it remained concerned that millions of workers were losing jobs due to load-shedding. — Additional reporting by John Harvey
HeraldLIVE