Page 24 - Vol 33 Issue 34 2021

Embedded Energy Generation Reformation
energy Energy Reformation

EMBEDDED

ENERGY GENERATION

REFORMATION

100MW Embedded Generation Threshold increase
and associated opportunities require enabling envi­

ron mental regulatory framework and support.

he insecurity around the risks to South Africa’s energy security, coupled
Twith the economic impacts of COVID-19, has intensified the business
sector’s long-standing call for increased private power generation capacity.

of state or independent power producer (IPP) IPP Programme projects, but is a single piece of a
will be responsible for the establishing the new larger integrated regulatory puzzle, with en vi ron-
generation capacity. These ministerial de ter- mental considerations and associated permitting
mi nations have given effect to various IPP pro- being another material part of the puzzle to
curement programmes over the years. hopefully see the benefits of the Exemption
Whilst load shedding and the associated Threshold being realised.
capacity constraints generally take centre stage in
the energy security dialogue, the objections and Environmental
challenges to environmental permitting of energy regulatory developments
projects is starting to come to the fore as such
On 10 June 2021, President Cyril Ramaphosa an- challenges have bearing on project development The misalignment with timing in environmental
nounced that the exemption threshold under and investor appetite in the energy sector. per mit ting applications processes; project de ve-
the Electricity Regulation Act 4 of 2006 (ERA) Alternative technologies to coal-fired energy lop ment; and bidding has created practical chal-
for an electricity generation licence (Exemption facilities, such as gas and renewable technologies lenges. This is occasioned by capacity constraints
Threshold) would be increased to 100MW, with self- are not immune to environmental challenges of environmental permitting authorities which
generating operations now being able to “wheel with increasing objections and appeals lodged may delay approval of applications particularly
electricity through the transmission grid, subject in respect of the environmental permits granted for environmental authorisation (EA) and water
to wheeling charges and connection agreements to LPG and LNG, solar and wind projects that use licences (WUL). From an EA perspective,
with Eskom and relevant municipalities”. There have been or are to be bid in IPP procurement and in light of the requirement for an EA for
is no limitation as to the type of technology that programme rounds. In respect of renewables, this energy generation facilities where the generation
this capacity exemption applies to. The necessary is of particular concern in light of the release of the capacity exceeds 10MW (save for PV facilities of
amendments to Schedule II to the ERA are due Renewable Energy IPP Procurement Programme up to 10MW in urban areas or to be developed
to be published within 60 days following the Bid Window 5 Request for Proposals in April 2021, on existing infrastructure), there have been a
President’s announcement. with bids due to be submitted 16 August 2021. number of regulatory updates which streamline
Energy landscape and Considering the long lead times and extensive and expidite timeframes for certain energy
costs associated with environmental permitting
development projects in designated areas. Pur-
challenges application and amendment processes, the legal suant to the implementation of various strategic
challenges have the capacity to compromise the
The energy landscape is informed by the 2019 projects in their entirety, as they may impact on environmental assessments, the Department of
Forestry, Fisheries and the Environment (DFFE)
Integrated Resource Plan (2019 IRP), which con- their ability to meet IPP procurement programme has published various notices in terms of the
tains capacity allocations for electricity generated bid requirements; private sector requests for National Environmental Management Act 107 of
from different technologies, including coal, hydro, proposals; or reach financial close. 1998 (NEMA), which cater for the identification of:
storage, PV, Wind, CSP, diesel, and gas. Based on With all of these setbacks amidst a power » geographical areas important for the
these allocations, the Minister issues ministerial supply crisis, the increase in the Exemption development of strategic gas transmission
determinations under section 34 of the ERA, Threshold is welcomed in encouraging a boom pipeline infrastructure, specifically the
specifying the new electrical energy generation to embedded generation developments as designation of nine phases of Strategic
capacity requirements and whether an organ additional energy security sources, in addition to Gas Pipeline Corridors. To this end, the

24 | AFRICAN POWER Mining & Oil Review Vol33 Issue 34 2021