Private energy projects poised for takeoff as Nersa receives avalanche of applications

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The quickest way to add more megawatts to the national grid is through private generation projects. In the coming week, another 16 are on the regulator's agenda for approval.
The quickest way to add more megawatts to the national grid is through private generation projects. In the coming week, another 16 are on the regulator's agenda for approval.
  • Sixteen private generation projects are up for approval this week.
  • Registration has been slow and onerous.
  • But Operation Vulindlela is driving progress.

The National Energy Regulator of SA (Nersa) has received an avalanche of applications by private power projects for registration as the move by mining companies and industry to generate their own electricity gains momentum.  

While Minister of Mineral Resources and Energy Gwede Mantashe gazetted new regulations to exempt projects of less than 100MW from licensing in August 2021, they are still required to register with Nersa. The registration process has been onerous and slow, with only two projects registered so far. 

But the week ahead could see a dramatic liftoff, with 16 projects on the Nersa agenda for approval.

Once projects have reached the approval stage, they have usually completed all the necessary steps for registration, which can take more than 12 months. The process of compiling an environmental impact assessment (EIA) report submitting it for approval alone takes about 200 days.

A spokesperson for Nersa, Charles Hlebela, said that following the increase of the registration threshold to 100 MW, Nersa had seen an increase in applications for registration.  

The movement is largely due to Operation Vulindlela, the joint project management unit between the Presidency and the Treasury, which has been assisting applicants as well as trying to shorten and streamline processes. 

READ Ramaphosa's Operation Vulindlela to cut red tape and speed up 100 MW power projects

Private or "distributed" generation is by far the quickest way to bring new megawatts onto the grid. SA has an energy gap of between 4 000 to 6 000MW and it will be at least two years until new capacity commissioned by government can deliver energy to the grid.  

There are, however, numerous industry players who want to build their own generation capacity. The Minerals Council, which keeps a database of projects, says there are 58 projects in the pipeline with a combined capacity of 4 500MW. 

Technology analyst for the Minerals Council, Christian Teffo, said he was very pleased that "things [were] happening". 

Said Teffo:

The Presidential process is establishing a process on how to do this. They are also looking at which steps can be done concurrently and which ones can be shortened.

Nersa has also dropped one of its most onerous steps from its original list, which was the requirement for applicants to present a signed power purchase agreement with the entities that will buy from it. 

READ Nersa greenlights first two private 100MW generation projects 

Government has gazetted distributed generation projects as "strategic infrastructure" under the Infrastructure Act, which will shorten assessment times for EIA’s from 107 days to 47 days. Other lengthy processes involve acquiring a "cost estimate letter" from Eskom on what will be involved in connecting to the grid and grid access code, which enables the project to connect to Eskom transmission lines. Eskom has recently decentralised these processes and added additional human resources to speed things up. 

Hlebela said that by the end of April 2022 - and including under previous regulations, the regulator had approved 168 registration applications, which would provide 315MW.

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