Page 44 - Energize October 2022

VIEWS AND OPINION

Activities exempt from licensing, The Schedule 2 Notice also contains the following proposed changes that are worth noting:
but which must comply with the • Connection Agreements will contain the conditions applicable to an end-user
Code and must be registered customer; references to “energy storage” in paragraph 2.1 and 2.2 will be amended to
with NERSA refer explicitly to “battery storage”.
The exemptions listed in paragraph 3.1 • We note that paragraph 3 still refers to “energy storage”, and not just “battery
of Schedule 2 were previously limited storage”. This potentially makes provision for pumped hydro storage, which in our
to the operation of generation facilities view should be envisaged. However, clarity on the intention here should be provided;
with a capacity of no more than 100 MW. and
Under the Schedule 2 Notice, this 100 • The following provision will be added to Schedule 2 (paragraph 3.6): “Save for the
MW restriction has been removed and licensing requirements, a registered generator shall comply with all applicable
paragraph 3.1 instead applies to generation legislative and regulatory requirements necessary for the sustained operation of the
facilities “of unrestricted capacity”. The national interconnected power system.” This provision seems to be intended to make
intended effect of this amendment it clear that exemption from licensing does not remove the need to comply with the
appears to be that all so-called “embedded applicable grid codes and any other applicable regulatory requirements.
generation” facilities, irrespective of
capacity, would be exempted from the The greatly anticipated removal of the 100 MW licensing threshold for embedded
licensing requirement. However, the generation projects is a positive change that will further incentivise private investment in
proposed amendment does not simply electricity generation and reduce the lead times to commence construction of projects.
state this. It, instead, uses the odd phrase This, along with other proposed regulatory and legislative changes, should have a
“unrestricted capacity” to indicate which positive impact on South Africa’s electricity supply crisis. The changes proposed in the
facilities are exempt. This phrasing could Schedule 2 Notice also pave the way for greater private sector participation in a future
be justifiably criticised for ambiguity, as competitive power market – as foreshadowed in the draft ERA Amendment Bill published
it could be read as meaning that the only earlier this year.
facilities that are exempt are those which
do not have any limits on their capacity. Despite the positive proposed amendments, there are some remaining issues in the
Despite the less-than-optimal choice of current Schedule 2 that are not addressed by the Schedule 2 Notice:
phrase, a sensible interpretation is that the • Under paragraph 3.2, it is unclear whether the reference to “where there is
amendment is intended to simply mean conveyancing of electricity through the transmission or distribution power system” is
that “any generation facility”, irrespective intended to exclude the operation of distribution lines that are not connected to the
of size or capacity, which meets the criteria grid at all. In this instance, the electricity exported to the purchaser’s system would
in paragraph 3, is exempt from the licensing not be conveyed through a transmission or distribution power system. We propose
requirement. that this be clarified by the DMRE; and,
In addition to the above, we note that • A “reseller” under Paragraph 3.5 is defined as a person who purchases electricity from
the removal of the 100 MW restriction a trading entity to sell it to a customer, but “trading entity” is not defined. It is not
also applies where a generation facility clear which sellers of electricity would qualify as trading entities. We propose that this
supplies electricity to one or more be changed to refer to a “trading licensee”.
customers by wheeling, as was the case,
with the previous exemption. Send your comments to rogerl@nowmedia.co.za

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