Private companies can now produce 100MW of electricity

President Cyril Ramaphosa on Thursday moved to deal with the electricity supply crisis harming the South African economy. He has announced a partial liberalisation of the sector by lifting the limit on self-generation of power from 1MW to 100MW.

The move, which includes the ability to sell excess capacity into the grid, is expected to take pressure off state-owned electricity utility Eskom — although not immediately — as private companies use the amended regulations to build their own power generation plants.

The significant shift in the amount of electricity that can be self-generated – mineral resources & energy minister Gwede Mantashe had wanted to lift the cap from 1MW to only 10MW – should eventually help reduce, if not eliminate, the load shedding that is holding back economic growth.

"The energy shortfall is a major risk to our economy," Ramaphosa said in a televised address. "Energy security is one of the priority interventions in our economic recovery plan." The president said reducing the risk of load shedding is "our single most important objective in reviving growth. There is no economy that can grow substantially without energy security."

The energy shortfall is a major risk to our economy. Energy security is one of the priority interventions in our economic recovery plan

'Significant shortfall'

He said the restructuring at Eskom, aimed at improving the performance of its power stations, improving its efficiencies and reducing its mountain of debt, is "positive". However, it's not enough to deal with the "significant energy shortfall that threatens our economy recovery" from the Covid-19 pandemic.

The amended regulations will exempt generation projects up to 100MW in size from the embedded licensing requirements of energy regulator Nersa, whether or not these projects are connected to the grid.