South Africa: A New Impetus for Renewable Energies and Independent Power Producers

• Written by Rui Nozes, Commercial Advisor, Embassy of Finland, Pretoria
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The South African Government has gazetted the amendment to Schedule 2 of the Electricity Regulation Act, which increases the licencing-exemption threshold for electricity generation – embedded generation connected to the grid – from 1MW to 100MW. This may present business opportunities for Finnish technology supply in the areas of Waste-to-Energy (W2E), biomass and energy storage.

Energy-intensive consumers such as mines and smelters, as well as medium-sized businesses, are looking to diversify their energy supply sources due to expensive and unreliable energy supply by power utility Eskom.

COUNTRY OUTLOOK

The South African Government has gazetted the amendment to Schedule 2 of the Electricity Regulation Act on 19 August, which increases the licencing-exemption threshold for electricity generation – embedded generation connected to the grid – from 1MW to 100MW. The 100MW licensing-exemption now gazetted by the Minister of Mineral Resources and Energy has the potential to allow as much as 15GW of new power-generation capacity to be built over the next 10 years or less. This would mostly cater for energy-intensive consumers such as mines and smelters, but could also include medium-sized businesses. It allows for the sale of electricity to “one or more customers”.

The embedded generation projects will still be required to register with the National Energy Regulator (NERSA), a process that should be concluded within 60 days, according to the government, once NERSA implements its online registration system.

As we noted in our Country Outlook on Circular Economy published in April, the business opportunities in Waste-to-Energy (W2E) arising from the ban on disposal of brine, hazardous e-waste and all batteries in landfills that will come into effect in 2021 in SA, as well as further bans on other materials up to 2024 such as organic materials up to 2027, could potentially provide opportunities to explore the areas of W2E. South Africa generates about 122-million tonnes of waste a year.

W2E solutions could alternatively contribute to greener energy power generation into the grid. While W2E solutions may not be competitive for power generation when compared to solar or wind solutions, the scarcity of available land to build solar and wind plants around the major urban areas, as well as the municipalities needing to manage waste and sludge from their water treatment facilities, may provide opportunities for W2E solutions. W2E development needs to consider the waste value chain more holistically (gate fees, recycling and re-use of waste, refuse-derived fuels, Combined Heat and Power, fertilizer production, etc.). The National Waste Management Strategy of 2020 anticipates the development of a strategy and policies to promote waste-to-energy projects, particularly involving organic waste.