DA calls for moratorium on onerous regulations for independent power generation to address electricity crisis

Issued by Kevin Mileham MP – DA Shadow Minister of Mineral Resources and Energy
20 Apr 2022 in News

Please find an attached soundbite by Kevin Mileham MP

As part of the ongoing DA campaign to have the ongoing electricity crisis declared a State of Disaster, the DA is calling on the Minister of Mineral Resources and Energy, Gwede Mantashe, to consider placing a moratorium on the onerous regulations that are creating insurmountable red tape for independent power generation in the country.

South Africa will struggle to expeditiously address the loadshedding nightmare if the electricity ecosystem, comprising regulators and policymakers, is continually beset by lack of urgency in removing regulatory obstacles for Independent Power Producers (IPPs). Despite the dire state of our electricity generation capacity, South Africa should be making it easy, not difficult, for IPPs to bring new power at scale and in the shortest possible time.

In a press briefing yesterday, Eskom CEO, Andre de Ruyter himself revealed that:

  • There is potential to add 200MW of new capacity from existing IPPs but they were being constrained by contractual obligations which prevent them from feeding this into the grid regularly. It is scandalous that the IPP office has not amended these contracts to allow for uncapped supply to the grid, considering the negative impact that loadshedding is having on the economy.
  • Existing IPPs were also potentially able to add an additional 200MW to their existing generation capacity if they were allowed to expand their plant capacity. However regulatory decisions were standing in the way.
  • The Eskom Board approved a plan on the 3rd of August last year to enable private generators to make bids and supply power to the grid. However, Treasury, Mantashe’s DMRE and NERSA are yet to approve the plan.
  • There were onerous registration requirements for embedded or own generation players who produce electricity less than 100MW. These requirements are being kept in place by NERSA.
  • Stringent zoning and slow environmental impact assessment processes were impeding the progress of onboarding IPPs interested in leasing Eskom land in Mpumalanga.

In the same vein, concerns have been raised on how state heavy handedness on localization rules could potentially increase the cost of renewable energy. Local material content requirements and import tariffs on imported steel need to be waived to lower the cost of solar and wind generation.

The ANC government may be in denial but the reality is that South Africa is in the middle of an electricity emergency. Unless urgent steps are taken to remove existing red tape for IPPs, there is a high probability that South Africa could face another decade of continuous loadshedding.

Mantashe and his colleagues in Cabinet must either act in the national interest and use the provisions of a State of Disaster on the electricity crisis to place a moratorium on unnecessary regulatory requirements, or get out of the way and allow provinces and municipalities that have the resources and capacity to do so to get on with it.