South Africa has a growing need for greater power system capacity. The Department of Minerals and Energy (DMRE), in collaboration with key stakeholders, looked at various options for alleviating the crisis, including increasing and accelerating the participation of Independent Power Producers (IPPs) and Generators in the energy sector.
South Africa has two acts that direct the planning and development of the country's electricity sector:
i. The National Energy Act of 2008 (No. 34 of 2008)
ii. The Electricity Regulation Act (ERA) of 2006 (No. 4 of 2006).
In May 2011, the Department of Energy (DoE) gazetted the Electricity Regulations on New Generation Capacity under the ERA. The New Generation Regulations establish rules and guidelines that are applicable to the undertaking of an IPP Bid Programme and the procurement of an IPP for new generation capacity. They also facilitate the fair treatment and non-discrimination between IPPs and the buyer of the energy.
In June 2021, the Department of Mineral, Resources and Energy (DMRE) gazette the proposed amendment to the Electricity Generation Capacity to enable private generation of up to 100MW without a generator license from National Electricity Regulator SA (NERSA).
In terms of the Electricity Regulation on New Generation 2011, the Integrated Resource Plan 2019 (IRP 2019) sets out the new generation capacity requirement per technology, taking energy efficiency and the demand-side management projects into account. The new generation capacity will be met through the technologies listed in the IRP 2019.
Please click here to be re-directed to the DMRE website for the current formal programme.
Please click here to read about the Independent Power Producers (IPPs) Grid Application Process.
Please click here to be redirected to the NERSA’s website for information on the Licencing Process.
Certain projects were developed prior to the gazetting of the New Generation Regulations. In the absence of regulations, these vested projects were undertaken in order to ensure security of supply. The projects and programmes that fit into this category are Eskom’s current new build programme, the medium term power purchase programme (~400MW) and the DMRE’s open cycle gas turbine (OCGT) IPP project (~1020MW).
Per the New Generation Regulations 2011, the “buyer” can only procure energy in accordance with the IRP. While a policy vacuum currently exists in respect of unsolicited offers (i.e. those proposals which are outside the scope and timeframe of particular programmes under the IRP, but present a unique opportunity which could leverage strategic and economic benefit for the country.
The Single Buyer Office (SBO), housed within the System Market Operator Division, was established in 2007. The SBO is currently preparing itself to execute the mandate of the IPP procurement process envisaged in the New Generation Regulations. Currently the SBO consists of a core team, with support from Eskom staff providing the necessary expertise complemented by advisors as required: The SBO deals with all IPP programmes (historical, formal and unsolicited). Regional import IPP programmes are being considered within the scope of inter-governmental memoranda of understanding.
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