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Is this Ramaphosa’s most decisive economic decision since taking office?

Ten-fold increase in the threshold exemption of renewable energy power generation projects widely hailed.
Image: Moneyweb

President Cyril Ramaphosa finally took the bull by the horns and announced arguably his most decisive decision since coming into office on Thursday, sparked by the power generation crisis at Eskom.

The second week of rolling blackouts (or load shedding) in the country amid the coldest period yet this year, seems to have forced Ramaphosa’s hand.

Read:

Whether it is the winter weather load shedding, which has riled South Africans and distressed businesses already trying to deal with Covid-19; or perhaps undisclosed bigger problems around electricity generation at Eskom, that led to the president’s decision is anyone’s guess.

Ramaphosa’s surprise announcement of a ten-fold increase in the threshold exemption of renewable energy power generation projects from licensing requirements, has been widely hailed by business, renewable energy bodies and even opposition parties.

The originally mooted new threshold was meant to be 10 megawatts. However, the president said on Thursday that the country would now exempt independent power generation projects of up to 100 megawatts from licensing requirements with the National Energy Regulator of South Africa (Nersa).

Read:

Companies can produce up to 100MW of power – Ramaphosa

SA to amend power regulations to boost supply – Ramaphosa

Such generation projects will, however, still need to secure a grid connection permit.

The further easing of licensing requirements is nevertheless a major reform move aimed at boosting South Africa’s private-sector or independent electricity generation capacity.

It will also give Eskom some headroom to address its generation woes and to rollout much-needed and more extensive maintenance of its ageing fleet of largely coal-fired power stations.

“This 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,” Ramaphosa said in announcing the planned amendment.

He said that the amendment would be published within 60 days.

Read:

Eskom cuts maintenance to the bone and still can’t avoid Stage 4 blackouts

The mystery of Minister Mantashe’s ‘survey’ explained …

“We welcome the announcement by President Ramaphosa to increase the ceiling for embedded generation from 10 megawatts to 100 megawatts and to exempt licensing under Nersa for such projects,” Business Unity South Africa (Busa) CEO Cas Coovadia told Moneyweb in reaction to the news.

“Busa has been calling for the increase in the ceiling from 10 megawatts to 50 megawatts in order to enable serious economic activity. We are absolutely supportive of the president, in fact, going further and increasing the ceiling to 100 megawatts,” he added.

“This is the sort of decisive action we have calling for from the president,” Coovadia  said.

“We applaud him and support him in taking this significant step, which will go a long way towards building confidence in our country and in our economy. It will also go some way in generating positive economic activity.”

In a separate media statement welcoming the move, Busa also called on government to fast-track the amendment within 30 days instead of 60 days.

“While this change is well received, Busa believes every day of delay and load shedding adds to our economic pressures and urges government to publish this amendment within 30-days of this announcement to expedite projects in this space,” it said.

The South African Wind Energy Association (SAWEA) also commended Ramaphosa’s announcement.

It said that it “views this as another indication the country is well on its way to a decentralised and decarbonised renewable energy generation power system”. The organisation has also been calling for a higher threshold.

Read: Move to becoming a ‘market’ based energy sector welcomed

SAWEA also highlighted reports that large companies, mines and farms have up to 5 000 megawatts in “pent-up projects” that “could be released if licensing requirements were lifted”.

The Durban Chamber of Commerce and Industry, South Africa’s largest metropolitan business chamber, also welcomed the move.

“President Ramaphosa’s economic recovery address on Thursday has put a glimmer of hope in the business world and in our entire economic outlook… We applaud his efforts on tackling South Africa’s energy crisis,” said Durban Chamber president Nigel Ward, who is executive vice president for manufacturing of Toyota South Africa.

“As organised business, we believe energy security is critical to economic prosperity.

“Eskom is a critical state infrastructure that cannot be allowed to fail or left to operate in disarray and fall into mismanagement, therefore improving the performance of the existing fleet of power stations, reducing debt levels, and completing its restructuring process is non-negotiable and a step in the right direction,” he added

“We support the President’s commitment to the amending of Schedule 2 of the Electricity Regulation Act to increase the Nersa licensing threshold for embedded generation projects from 10 megawatts to 100 megawatts,” said Ward.

“This amendment will diversify our energy supply, reduce red tape, and create more opportunities for energy generation. We are optimistic that the announcement will increase investment in the South African economy, thus promoting a positive economic outlook, which will yield greater financial investment results.”

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I don’t think there are any ANC cadre’s that can show a balanced approach to the RSA economy – that’s why we have these rolling disasters

I would not give him credit for this. The sheer pent up negative of years of ANC corruption and mismanagement made the decision for him.

It’s probably worse than what they make out at Eskom and all the other SOEs..

Popeye should rather stick with cattle farming and leave the economy alone.

Gweezy must be seething. Probably hawking that MBA round the private sector as we speak.

I think Cyril’s hand was forced. Suspect that issues at Eskom are much worse than they are letting on and this is really the only hope to try and prevent a catastrophic economic impact.

It was a “no brainer” for them. Imagine the deals the cadres can do on the side on this thing. Those who missed the COVID-19 PPE deals or the Karpowership deal, can now get a slice of this.

Good move – just hope it is in time for businesses – especially mining firms – to take advantage of this. The current resource boom is possibly a once in a few decades phenomenon that we should take full advantage of. It is already driving a lot of the confidence in the SA economy.

60 days to maybe and if maybe approved 1 to 2 years before first ” farms ” in production…..right?

30 or 60 days?????????????????

fast track this amendment with covid-speed:

tonight please!!!

then we can start sunday afternoon with a genny!!!!

The ANC have now made SA an economy that is run almost entirely by proxy.

Private everything.

Definitely not — His biggest economic decision was to continue to use BEE as a way to destroy the economy so successfully.

If embedded generation wasn’t outlawed by a decision taken by the government, then this problem would have solved itself.
Removing an impediment to progress that government themselves put in place, is more of a retreat from an untenable position, that a greta economic decision.
Government must stop being an impediment to progress.

The fact that we are applauding Ramaphosa for allowing the private sector to save the economy and to rescue the ANC from their destructive and myopic economic policies, shows how far the situation has deteriorated. It is like thanking a burglar for leaving you a loaf if bread after they have ransacked your house, killed your dogs and abused your family members.

Ramaphosa is the hero who saves the sailors from drowning after he torpedoed their boat.

It goes without saying to source the power generation as far away from the local political sphere of ‘influence’ as possible. Offshore plug-in submarines seems like a good idea. Have them maintained and operated by the best people for the job (but don’t tell anyone, meritocracy is radical to an increasing number of noisy wasters and losers). Beware of cable theft, tunnel in from at least 150 metres below sea level. Keep everyone out, especially con artists and political puppets.

Good idea, but how can they tie us into 20 year contracts?

Great idea. But (and I don’t want to be cynical), what if solar farms are expropriated without compensation?

‘sparked by the power generation crisis at Eskom’ – you meant burning for almost 10 years already!!!

Snails make faster decisions when they see fire!

now that the HYPE is over…..everything will be honky dory ? think again!

10x – it should be 10, 000 x!!! Eedjits

First we screw it up royally – than we give you PERMISSION to patch over our stuff up partly at your expense and risk.
Great leadership ?

i am sorry but whenever these people talk i am
a sceptical
b suspicious of which cadre is going to get an inflated tender
c wonder who is going to do the work considering the low IQ of the majority of the young students/employees
so gatvol

The only companies who will become involved are those who have no option such as mining companies and larger corporates. They have no option but to wait for approvals and already have ‘conformance’ as far as BEE is concerned.

For a new entrant with access to technology which produces renewable energy of 1 MW per site, a we are able to, it simply is not worthwhile.
Also based on our past experience with NERSA, prospective BEE ‘partners’ have already begun ‘lining up’ to see what they can score from hapless prospective Independent Power Producers. We are taking our technology elsewhere…

End of comments.

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