Delaying small-scale power generation ‘harmful to economy, customers’

The future of South Africa’s energy supply lies in enabling small- and medium-scale distributed embedded generation, such as rooftop photovoltaic systems and other embedded generation technologies, but the current policy framework is delaying the rollout of these technologies.

According to Nomfundo Maseti, of the National Energy Regulator (Nersa), the current policy framework guiding new generation did not contain capacities for distributed generation, but this was covered in the draft integrated resource plan (IRP), which has not become policy yet.

She said the current policy and legal framework stated that any operation of a generation, transmission or distribution facility should be licensed or registered with Nersa.

Speaking at a Nedbank and EE Publishers’ Energy and Infrastructure seminar yesterday, Maseti said: “The minister provided a directive to Nersa in that Nersa should proceed to register distributed generation to a maximum threshold of 500MW.”

She said the benefits presented by embedded generation included climate change mitigation, job creation and other socioeconomic benefits as well as security of electricity supply.

Maseti said there were a number of reasons for introducing the renewable energy independent power producer procurement programme.

These were to increase the national energy mix, meet increasing demand due to population growth, expand the grid and generation capacity.

There were two different kinds of market-based instruments to support renewable energy: investment support and operating support. The former included capital grants and reduced equipment purchase costs. Operating support schemes included feed-in tariffs, green certificates, tender schemes and tax exemptions.

Executive director at the SA Photovoltaic Industry Association Niveshen Govender said skills development was needed to supply a qualified workforce to the industry.

Energy expert Chris Yelland said it was widely acknowledged that small- and medium-scale distributed embedded generation could deliver several thousand megawatts to the grid in one to two years, at no cost to Eskom or the fiscus.

“However, policy, regulatory and planning uncertainty, and misguided efforts to protect vested interests and the status quo is delaying the rollout of it, to the detriment of customers, job creation and the economy.”

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Challenges presented by embedded generation

• Reduced revenue from electricity sales for municipalities and Eskom.
• Potential safety hazards (fire and electric shock).
• Potential for increased electricity and infrastructure costs.
• Potential of increased administrative burden.
• Potential of rebound effect, where a reduction in price of a commodity (electricity) leads to greater use of that commodity.

Opportunities presented by embedded generation

• Environmental benefits.
• Job creation.
• Security of electricity supply (through diversification and decentralisation).
• Potential for lower costs.
• Local ownership of generating capacity.
• Peak load shaving.
• Stimulating local economy.
• Technological innovation.
• Mitigating supply bottleneck.
• Investment opportunity

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