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Nersa fast-tracks solar power licences to ease strain on Eskom’s tottering power grid

Following changes to regulations that now allow for faster and simpler approvals for generation licences.
The two new solar projects in the North West are to be developed and operated by the SOLA Group. Image: Supplied

Nersa (the National Energy Regulator of SA) has approved two 100MW solar power projects in the North West Province under new regulations which allow for faster and simpler licence approvals.

This comes at a time when the Eskom power grid is under unprecedented strain, with almost half of its installed capacity often out of action, and the spectre of a total blackout now being openly discussed in Parliament and by energy experts.

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The two solar projects are to be developed and operated by the SOLA Group and its partners for Tronox Mineral Sands.

SOLA’s largest shareholder and equity partner in the projects is African Rainbow Energy.

Schedule 2 under the Electricity Regulation Act was amended last year to increase the threshold for ‘embedded generation’ from the current 1MW to 100MW without the need for a licence. The purpose was to unlock investment in new generation capacity and advance the goal of national energy security.

Read: Companies can produce up to 100MW of power – Ramaphosa

African Rainbow Energy CEO Brian Dames says the company is committed to investing R3 billion in the economy. “These projects are starting to realise this commitment as well as African Rainbow Energy’s commitment to use new technology to provide large-scale clean power solutions for the economy.”

This will pave the way for more large-scale private projects seeking approvals to contribute to new generation capacity, says Dom Wills, CEO of SOLA Group.

Rudi Dicks, head of project management at the office of the Presidency, says raising the licensing threshold for new generation projects has unlocked a massive pipeline of investment.

“To fast track these projects we have established a joint task team between government and industry which meets weekly to remove many of the constraints. All of this is important to help alleviate the shortage in electricity supply,” says Dicks in a statement.

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

The 100MW private generation facility without the need for a licence is an excellent opportunity for the industry to generate its own power or possibly acquire electricity from Independent Power Producers without waiting ages for a generation licence, with the additional costs that come with that, says Des Muller, energy expert and director at NuEnergy Developments.

A so-called ‘wheeling framework’ allowed by Eskom makes it possible to locate these new power plants in more ideal environments and wheel the power to the consumer in another part of the country, if there is available capacity on the grid. “I am not sure if Eskom’s wheeling agreement and costs have been finalised, but one could expect it will significantly raise the cost of the electricity for the consumer, as we’re seeing in Europe, adds Muller.

Load shedding likely to continue for a decade

“Those interested in this power generation opportunity probably want to secure their power supplies against load shedding, which is likely to continue for another decade. Renewables provide clean but unreliable and intermittent power, which may not satisfy the needs of the interested electricity consumer, although clean power would be a benefit for some. Battery storage will also significantly raise the tariff, as will using Eskom only as backup power,” says Muller.

Read:
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The 100MW embedded generation facility is also open to other technologies such as gas turbines. These are sometimes quicker to build and can be delivered on modular mobile skids. They can also provide more reliable power and, when harmonised with renewables, can provide a more valuable and cleaner power supply for our industry. The same applies to small modular reactors (SMR), when they are commercially available later this decade and licensing requirements are better understood, adds Muller.

These new power projects may not have the luxury of a sovereign guarantee, which has been a feature of previous IPP projects selling power to Eskom.

“The bankability of the power plant will depend on the guarantees provided by customers over a 20-year period, which may be unviable for most private companies or mines. This could also assist municipalities in achieving electricity independence, but most are bankrupt or unable to put up the long-term guarantees required by the lenders or sponsors. Achieving financial close on these projects could therefore be a challenge,” says Muller.

Large scale bilateral energy trading is the first step in South Africa’s plan to ultimately open up the grid to allow a more flexible electricity trading, says SOLA in a statement. Draft legislation has been released which signals the intent to have a consolidated central purchasing agency allowing electricity traders to sell energy using the grid as a conduit.

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R3b for two 100MW plants?

Sounds expensive for the scale unless they need to pay for many many miles of transmission and interfaces…

Excessive only due to the BEE and other ancilliary “approval” fees payed to connected cadre!!!

Caper1 : do you mean to tell us that this Brian Dames is the same Brian Dames that used to be the CEO of Eskom, or that this African Rainbow is the one that belongs to Patrice Motsepe, brother of our first lady and brother in law of former energy minister Jeff Radebe?

Can’t be that the world is that small

Ask an expert:

For the councils that cater for wheeling, what is their rate per kWh including connection size fees? They will still charge you for that MW connection to them, in addition to charging you for transporting your own electrons.

When you add the fee Eskom Transmission charges (assuming your chosen wheeling supplier is not also on yet another council) for getting the power to your council, to the fee the supplier charges, to the fee your council charges for wheeling, what is the total of your reticulation fees plus the two wheeling plus the supply?

Then lastly, when your council shreds your substation at 2pm, will they allow your privately purchased electrons safe passage through to your business loads?

In my case the answer is that I would have to be mathematically challenged to wheel power rather than generate my own and No : I get shred with the rest of the substation and revert to diesel gennies.

End of comments.

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