President Cyril Ramaphosa has announced an amendment to the Electricity Regulation Act that will make it easier for independent power providers to generate power and even sell it back into the grid. Ramaphosa announced that government will amend schedule two of the act to raise the exemption threshold from 1 megawatt to 100 megawatts.

That means power producers will be able to produce power without going through a long drawn-out process with the energy regulator.

"Generators will also be allowed to wheel electricity through the grid subject to wheeling charges and connection agreements with Eskom mand relevant municipalities," Ramaphosa said.

Ramaphosa also highlighted that in the past weeks and months, we have made some important progress in addressing the energy crisis under the leadership of the Minister of Mineral Resources and Energy. This includes the announcement of 11 successful bidders for the Risk Mitigation Power Procurement Programme and the opening of Bid Window 5 of the renewable energy programme to procure 2 600 MW of new generation capacity from wind and solar PV projects. He added that Eskom is working hard to improve the performance of its existing fleet of power stations, reduce its debt burden and complete its restructuring process.

While these steps are positive and necessary, they are not enough to address the immediate and significant energy shortfall that threatens our economic recovery. 

The amended regulations will exempt generation projects up to 100 MW in size from the NERSA licensing requirement, whether or not they are connected to the grid. This will remove a significant obstacle to investment in embedded generation projects. Generators will also be allowed to wheel electricity through the transmission grid, subject to wheeling charges and connection agreements with Eskom and relevant municipalities.

However, generation projects will still need to obtain a grid connection permit to ensure that they meet all of the requirements for grid compliance. This will ensure that we are able to bring online as much new capacity as possible without compromising the integrity or stability of our energy system.

Generation projects will also need to have their registration approved by the regulator to verify that they have met these requirements and to receive authorisation to operate. Municipalities will have discretion to approve grid connection applications in their networks, based on an assessment of the impact on their grid.

They will also have to undertake an Environmental Impact Assessment and all other requirements of existing legislation. This will ensure that while we enable as much new generation capacity as possible to come online, we also ensure the orderly development of the energy system.

This reform is expected to unlock significant investment in new generation capacity in the short and medium term, enabling companies to build their own generation facilities to supply their energy needs.