Electricity will now be generated and sold on the open market with supply and demand factors determining tariffs, Electricity Minister Kgosientsho Ramokgopa said at the latest Energy Action Plan briefing.
Announcing reforms including flooring the accelerator on water, procurement, grid access, environmental, gas industry and other approvals, Ramokgopa said the department had set up a one-stop shop for generation capacity, from entities with excess generation capacity to renewables.
“These are reforms of tectonic proportions. We are within touching distance of reaching our goals. Of course there will be moments of setbacks here and there, but we have concrete approvals from government,” he said.
He said the benefits to the overhaul of the holy grail of electricity, the Electricity Regulation Act (ERA) now undergoing Parliamentary approvals, would enable sweeping changes that would remove all red tape from approval processes with due consideration to the spirit of the initial guidelines.
The changes included the establishment of a market platform that the trade in electricity by multiple participants.
ERA changes are expected to improve the reliability of electricity supply, and consumers will have more choice on who supplies their power..
“As I stand before you, every time when we announce the improvement in the stages of load shedding, the improvement in supply, the focus is primarily on Eskom and a few of the players in the renewable energy players.
“With the introduction of the reforms … the more players we have on the map means that there is more generation capacity and it’s able to stabilise the supply so there’s increased reliability.
“The other upside is that it offers choice to consumers. They can choose (what) they are getting from Eskom … from utility providers, and multiple providers. We are introducing choice in how you are going to procure this new generation,” he said.
“The benefits will be the lowering of tariffs. We are moving away from the monopoly situation, though Eskom will still be the dominant player, but we want to ensure the reliability of supply and democratisation of producing and selling of electricity,” Ramokgopa said.
The reforms are envisaged to increase investment in electricity generation and innovation as the private sector is apportioned part of the pie.
He said amendments to the holy grail of electricity, the ERA, was to make it easier to produce and sell electricity in South Africa. “In order to do this, it established what the bill refers to as a transmission system operator (TSO), which is managed by a newly formed entity that is wholly owned by Eskom and by extension wholly owned by the South African public, the NTCSA,” Ramokgopa explained in reference to the National Transmission Company of South Africa.
This comes as in March, the National Energy Regulator of South Africa (Nersa) consented to the transfer of powers and duties relating to power purchase agreements with independent power producers from Eskom to the NTCSA.
Nersa has stated that the NTCSA’s trading licence would be amended to reflect the changes, including Eskom’s unbundling its generation, transmission, and distribution businesses in line with the Integrated Resource Plan (IRP) road map.
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