The short-term emergency measures to procure more electricity generation that President Cyril Ramaphosa promised last December have become ensnarled in red tape, and it will be years rather than months before new capacity comes on line.
The latest roadblock is the National Energy Regulator of SA (Nersa), which must “concur” with a determination under the Electricity Regulation Act issued by minerals & energy minister Gwede Mantashe before the procurement can begin.
Nersa said on Wednesday that it would be another three months for it to be in a position to concur on short-term measures outlined in the first determination and another six before it could concur on a second determination for a range of technologies from independent power producers.
This is because it must allow for a public-participation process before it can concur. In April 2017, the high court in Cape Town struck down a department of energy determination to procure nuclear power on the basis that there had not been public consultation.
Once this has happened, the department of mineral resources & energy can issue a request for proposals, which in a competitive process typically takes six months. Successful projects then usually take as much as a year to achieve financial close, which requires all contracting with Eskom to be done before financing can be secured.
Industry sources say that a likely scenario then is that construction will begin in 2022. Solar PV can take 12-18 months to build, wind 18-24 months, gas about five years and coal about seven years, assuming finance is available.
Before reaching Nersa on February 21, the determinations made by Mantashe had already followed a tortuous process. The department of energy first said in October 2019 that it would procure “emergency” short-term capacity. It was only after stage 6 load-shedding in December and Ramaphosa’s intervention that the department issued a request for proposals.
However, it took another two months after that for Mantashe to take the first regulatory step and draft the two determinations.
Commentators have been critical of the time Nersa says it requires for the consultation. In discussion papers prepared for the consultation, Nersa calls on the public to provide views on a wide range of things, many being policy questions long since decided by the Integrated Resource Plan, itself a document of extensive public consultation.
UCT professor Anton Eberhard said he was “dismayed by the lack of urgency and the proposed consultation process”.
“They’ve sat on the ministerial determination for a month. Now they’ve issued an unnecessarily complicated consultation document and require comments only by May 7 2020. It will be months before power is actually procured.”
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