Grid Access Unit (GAU)
To facilitate and manage the grid access entry of IPPs and other generators, providing holistic solutions to aptly serve their needs, resulting in successful and viable grid connections and operations.
GAU’s key objectives are to manage and facilitate service relationship and grid access for IPP’s and Generators to ensure:
- Sufficient transparency to guarantee non-discriminatory grid access and operations for IPPs and generators.
- Transparency on pricing policy, network contracts, and operating agreements.
- Optimised IPP and generator connection and operations processes.
Consultation and application phase:
- The grid connection process addresses the need for consultation with IPP and generator developers or consultants. The purpose is to advice on potential grid connection solutions.
- It addresses the process requirement clarification as well as any briefing notes and standards.
- The estimated project costs and the associated agreements to establish the required grid infrastructure.
IPP / Generator submits application:
- The IPP/generator developer completes or revise an application with required information for Part 1 of the application form.
- The Provision of Reasonable assurance of the right to develop on a proposed site, e.g. landowner consent and Environmental Impact Assessment (EIA).
- The IPP/generator developer submits an application to Eskom Grid Access Unit in the respective Region.
- The Region’s respective IPP/generator Executive receives, acknowledges the application form.
- The application form is captured on the system.
- The IPP/generator developer is furnished with the application reference number
Review application and request additional information:
- The IPP/generator developer is contacted to further discuss actual details with regards to the application request.
- A reasonable assurance is provided that the project will be developed from the IPP Developer/Generator, Eskom and all relevant stakeholders.
Raise and process the cost estimate letter fee:
- The cost estimate letter fee invoice will be generated and issued to the Developer/Generator.
- IPP/generator accepts the invoice and pays the invoiced cost estimate letter fee.
Grid Access Unit for IPPs and generators is the unit that manages and acilitate grid access for generators and IPPs.
Grid Access Unit for IPPs and generators was established within Eskom in response to its strategic imperative of “keeping the lights on”.
The Unit serves as a point of contact or entry for Independent Power Producers (IPPs) grid access and its role is to service IPP customer requests. Furthermore the Unit facilitates the grid access activities and development.
The generator must apply to the applicable municipality for a grid connection.
The generator must apply to the applicable municipality for a grid connection.
Please refer to IPP Quotation and Connection process
Certainly, Eskom has approved the self-build policy for construction of Distribution and Transmission assets up to 132kV and 765kV respectively. This is to afford IPPs an opportunity to seek efficiencies on costs and connection timelines.
- The applicants would have to apply and accept the indicative Cost Estimate letter, and to accept the terms and conditions of a Generator Budget Quotation from Eskom.
- This leads to a Connection/Use-of-System/Operating Agreement which must be signed between the Generator and Eskom before Eskom will allow a connection and/or synchronisation of the generator to the Eskom Transmission or Distribution system.
- In addition to the connection agreements, the IPP shall enter into a Power Purchase Agreement (PPA) with Eskom’s Single Buyer Office.
The charges payable are Connection Charges and Use of System (UoS) charges.
- A Connection charge is payable for directly allocated costs of connecting the Generator to the Eskom system, which shall be either:
- a Distribution and/or Transmission Standard Connection Charge if the connection is a standard connection and/or
- a Distribution and/or Transmission Premium Connection Charge if the connection is a premium connection.
- a Premium Connection Charge covers costs for a reliability of supply requested by the customer that exceeds the Eskom standard.
- UoS charges are payable on a monthly basis for the use of the system and connection costs not covered by the Connection Charge.
Connection Charges are payable at the time of accepting the Eskom Generator Budget Quotation.
- A Connection Charge Guarantee must be provided if payment is not made at the time of accepting the Budget Quotation. This guarantee amount will be decreased by each payment received in terms of any agreed payment schedule. A bank guarantee may be provided.
- An Early Termination Guarantee may be required to cover irrecoverable expenditure incurred by Eskom in the construction of the connection to the Eskom system.
- NERSA is currently obtaining inputs from the industry and drafting a framework for UoS charges which will comprise network charges, service charges and administration charges.
- In the interim, the only UoS charges levied by Eskom are service and administration charges.
The NERSA has granted Eskom an average price increase of 8% for each of the next five years – this is the average increase that consumers will experience.
- The Generator will install meters which are acceptable to the Eskom for the purposes of billing for the PPA.
- Other metering and connection requirements will be specified by the municipality.
DoE bidding process
- This programme is being managed by the Department of Energy (DoE) and all questions related to the requirements of the bid submission as stated in the request for proposal (RFP) should be addressed directly with the DoE.
- At this current phase, Eskom’ role is to provide grid connection to the IPPs to its grid and has been designated as the buyer of energy.
- Referring to the Independent Power Producers (IPPs) Department of Energy Renewable Energy procurement programme (RE IPP PP), this is being conducted over various rounds, for which Rounds 1 and 2 are in the execution phase, and the announcement of preferred bidder for Round 3 and letters of appointment were sent out to preferred bidders on the 29th of October2013.
- For Round 1 a total of 1436 MW has been contracted for, and more than 6 projects have already been connected as of November 2013.
- The last planned connection date for any project under Round 1 is for a concentrated solar project of 100MW capacity, which will be connecting to the Eskom Transmission grid. The planned grid connection date for that is 4 July 2014.
Eskom is working very closely with the IPP developers, in order to ensure smooth project execution of the grid connection according to agreed schedules, and where possible, ahead of schedule. The projects are structured in such a manner as to take advantage of available resources and project-specific schedules. At the moment, most projects will connect within the contracted connection dates (although most grid connection projects
have been early and some slightly behind schedule due to various reasons).
Eskom is still committed to connect all the other projects on, or before the contracted grid connection dates. These dates are aligned with the IPP/developer project timelines and project schedules. However, some projects are a concern.
Eskom is projecting to connect all the projects within the agreed timelines and specifications.
At the moment the availability of material (such as steelworks) causes some delays, as well as some IPPs not complying with relevant and applicable standards, designs, codes, specifications and the Grid Code.
- Under Round 2, the first project that will achieve grid connection date is a 8.8MW photovoltaic project, planned for 28 May 2014. The commercial operation date for this project is contracted for 6 June 2014. The last grid connection project under Round 2 is planned for 2 December 2015, which is a 140MW wind farm connection to the Eskom Distribution network.
- A total of 1091MW has been contracted under Round 2.
- Bid close for Round 3 was in August 2013, and the DoE has announced 17 preferred bidders for this round however the department may announce additional preferred bidders for this round.
The DoE has not yet fixed any timelines for bid rounds 4 and 5. For more information please visit the DoE IPPs website at www.ipprenewables.co.za
- The IE is appointed in terms of the PPA and acts on behalf of and owes a duty of care to both the IPP and Eskom.
- The IE is responsible for issuing a Facility Completion Notice to Eskom – a notice which effectively warrants that the plant has passed all the relevant/applicable acceptance tests, codes (including Grid Code compliance) and has been successfully commissioned.
- N.B. This notice is issued after the plant has been successfully commissioned (and tested to be GC compliant) and the gen (asset) synchronized to the network.
- N.B. The FC notice issued by the IE is solely based on the information provided to the IE by the IPP. The IE is not obliged to conduct any tests, verify or witness any demonstrations pertaining to acceptance testing and is appointed purely for commercial purposes.
Can the IPP amend the Direct Agreement after discussions with their lenders or financiers?
- The Direct Agreement is a standard Agreement with the Lender of an IPP Project.
- The IPP may not make any changes to the content of the Proforma Direct Agreement.
- Standard terms must be applied across all IPPs – consistently. The IPP should simply fill in the variables/blank spaces without deleting/amending any clauses.
Renewable Energy Projects
The DoE may announce further Rounds in the current RE IPP PP. The DoE has also issued an RFP for “small IPPs”, for which 100MW is allocated for projects ranging in size from 1 to 5MW.
Eskom tariff application
Solar Power Projects
For the Department of Energy (DoE) procurement programme for renewable energy, a total of 46 solar power projects have been awarded preferred bidder status. This equals to 2,515MW of capacity which includes both photovoltaic and concentrated solar technologies; this has been awarded to various Independent Power Producers (IPPs).
Coal fired power
Eskom’s average cost of electricity (all technologies) during the 2012/13 financial year was about R0,50/kWh (Source: Annual Report). It was apparent that through the competitive bidding programme of the DoE, that the prices that were bid for Solar Photovoltaic did reduce, also owing to equipment prices that have been declining from round 1 to round 3. For Round 3 the
average cost of PV per kWh is R0,88.
However, the direct cost of renewable energy bid into the programme, are still higher than the current average electricity cost.
Additional Frequently Ask Questions:
- IPPs are required to pay for the infrastructure dedicated to connect their projects to the Eskom grid.
- Where the infrastructure is shared, the IPP is required to pay for their portion of the infrastructure.
- In some instances the IPP project would require deep strengthening of the Eskom network. In such a case, Eskom or the IPP will incur the costs.
Generators pay for the use of the system (i.e. service and administration charges).
- The IPP must install meters which are approved by Eskom for the purposes of billing for the PPA.
- Other connection requirements will be specified by the relevant municipality.
- The Integrated Resource Plan 2019 outlines a plan to meet South Africa’s future energy needs. The IRP takes into consideration and regulates the future generation capacity from IPPs.
- Therefore, the current RMIPP program is aligned to the IRP and ministerial determinations.
- There is no competition between the existing Eskom generation and future generation from IPPs since the procurement programs are intended to close
- the current energy supply shortfall to avert loadshedding.
- The requirements for generation licenses are regulated by NERSA.
- The current regulations grant exemptions for generation licenses up to 100 MW.
- IPPs are encouraged to contact NERSA for further guidance on the registration process.
The IRP and the Ministerial Determinations will dictate the scale and pace of procurement of energy from IPPs. Eskom will participate and contribute in the process.
- All IPPs intending to connect to the national grid should comply with the South African Grid Codes as well as Eskom’s Standard for the Interconnection of Embedded Generation as revised from time to time.
- IPPs are also expected to comply with relevant national and internationally recognised standards such as the NRS-048 suite of standards regulating the quality of supply.
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