NERSA DETERMINATIONS GIVE HOPE FOR PROCUREMENT OF NEW GENERATION CAPACITY

NERSA DETERMINATIONS GIVE HOPE FOR PROCUREMENT OF NEW GENERATION CAPACITY

Background:  The South African Wind Energy Association (SAWEA) has co-ordinated a consolidated wind industry response to the two consultation papers, published last month by the National Energy Regulator of South Africa (NERSA), for two separate Ministerial Determinations submitted by Mineral Resources and Energy Minister, Gwede Mantashe. The first consultation paper deals with the Minister’s  Section 34 Determination aimed at closing the immediate supply gap of 2 000 MWs, as identified in the IRP 2019 for the years 2019 to 2022. The second deals with the specific generation technologies outlined in the IRP 2019, which is normal power procurement that will constitute further rounds of the REI4P (6800MW).

Following the approval of the Integrated Resource Plan in 2019, Section 34 of the Electricity Regulation Act requires that the Minister of Mineral Resources & Energy determines what capacity will be procured when and from what technology to give effect to the IRP. The Energy Regulator (NERSA) is then required to concur with the Minister on his determination, but not before they go through a public participation process. NERSA has officially launched the public-participation process by releasing the two consultation papers for public comments.  The Wind sector sees this as significant progress, as it brings us a step closer to the procurement of new generation capacity that the country desperately needs. It is a great opportunity to use this lock-down period to progress the public participation process, so that when the economy gets back on track (and energy demand rises again), government will be ready to commence with procurement.

The first consultation process for 2000MW  suggests an expedited process could be concluded within 60 days from the date of submission, approximately in July. For the second consultation paper (6800MW), the process includes public participation for up to 120 days (6 months). . It is currently unclear whether the lockdown will impact on these timelines, however, NERSA has indicated that any public meetings that are required as part of the public participation process could be held over video conference.  Should the lockdown result in delays, it is hoped that NERSA will look to make up the time further into the concurrence process.

The wind industry is of the view that the determinations should allow for sufficient allocation for energy procurement by government and by the Private Sector, in line with the Minister’s announcement to allow private sector to procure their own energy from independent energy producers.

With specific regards to emergency procurement, we believe that renewable/wind energy should not be excluded from the emergency procurement process as it is cost-competitive and can be quickly deployed.  The South African electricity supply crisis is clearly critical and procurement should be expedited wherever possible so that new capacity can be brought online to alleviate this crisis . Government should not be fixated on plant size restrictions because process restrictions will automatically exclude plants that are either too small or too big. Energy producers should be free in the choice of energy technology they bid as long as aspects like dispatchability, environmental and Health and Safety requirements are met. SAWEA supports the inclusion of battery storage technology in the Determination. Despite the emergency nature of the procurement, tariffs should still be market related and competitive. We see this process as an opportunity to fast-track the commitments to have an independent system operator that would procure energy from all generators on a fair and equitable basis, without prejudice.

Once NERSA provides concurrence to the Determinations, it will give effect to the IRP 2019, thereby setting the wind industry up for 6800 MW procurement over a three year period from 2022 to 2024.   This will enable the wind industry to contribute to rebuilding the economy in terms of quickly bringing electricity onto the grid, attracting investment and creating jobs.