The relevant paragraph of the official written text of the minster's speech says: "Following concurrence by energy regulator, Nersa, we are in the process of gazetting a revised Schedule 2 of the Electricity Regulation Act; which will enable self-generation; and facilitate municipal generation options under "Distributed Generation". This will help close the energy gap caused by deteriorating Eskom plant performance. Depending on the circumstances, the generation plant may only require registration and not licensing".
The central piece of legislation regulating electricity in South Africa is the Electricity Regulation Act, 4 of 2006 (the ERA). Section 4 of the ERA grants the National Energy Regulator of South Africa (Nersa) various powers and duties in respect of the electricity regulation framework, including the consideration and issuance of generation, transmission, distribution and trading licences, and the regulation of tariffs.
Schedule 2 of the ERA sets out activities which are exempt from the obligation to apply for and hold a license. These activities must still be registered with Nersa. These activities currently are, in summary, the operation of a generation facility:
Section 34 of the ERA provides that the minister may determine that new generation capacity is needed, the types of energy sources to be used, to whom the electricity may be sold and the manner in which the electricity is to be procured, for example through a competitive tender process and whether or not involving the private sector.
The Electricity Regulations on New Generation Capacity were published in May 2011 (and amended in November 2016) apply to new generation capacity procured by organs of state only - so do not apply to self-generation by privately owned mines or industry.
The Integrated Resource Plan gazetted in October 2019 is South Africa's plan for the procurement of generation capacity up to 2030. The last such plan was the Integrated Resource Plan 2010 (IRP 2010) promulgated in March 2011, and such plans are intended to be updated every two years.
Section 10(2)(g) of the ERA allows the minister to grant deviations from the Integrated Resource Plan. In May 2019, Jeff Radebe, the previous minister of energy, wrote a letter to Nersa granting a deviation from the then extant IRP 2010-2030 for licensing the operation of generation facilities between one and 10MW. Now, the current Integrated Resource Plan does not cap the amount of distributed generation that may be produced up to 2022. From 2022 to 2030, it is capped at 500MW per year. Distributed generation in the current IRP refers specifically to projects between one and 10MW.
Currently:
The minister has now said that together with Nersa, his department is in a process to gazette a revised schedule 2 of the ERA to enable self-generation and facilitate municipal generation options under Distributed Generation, as defined in the current IRP. Miners and industry can derive some encouragement from the minister’s comments but should examine the detail of any legislative amendment that comes into being as a consequence of his comments in order to be certain.