The cabinet has approved amendments to the Electricity Regulation Act for public comment, as the government pushes to open up the energy sector and boost supply.
In his state of the nation address (Sona) on Thursday evening, President Cyril Ramaphosa said the amendments would enable a competitive market for electricity generation and the establishment of an independent state-owned transmission company.
The state is pushing to break up Eskom into three separate functions and parts — generation, transmission and distribution — as outlined in the road map for the power utility to achieve sustainability.
The electricity utility, which supplies virtually all of SA’s power, is hamstrung by staggering debt of nearly R400bn, with maintenance issues at its ageing power plants leading to bouts of load-shedding, which threaten economic recovery.
Ramaphosa said the electricity crisis was one of the greatest threats to SA’s economic and social progress.
“When electricity supply cannot be guaranteed, when railways and ports are inefficient, when innovation is held back by a scarcity of broadband spectrum, when water quality deteriorates, companies are reluctant to invest and the economy cannot function properly,” Ramaphosa said.
Ramaphosa said ageing power stations, poor maintenance, policy missteps and the ruinous effects of state capture, had resulted in a shortfall of about 4,000MW of electricity.
He said that during the past year, the state had taken firm steps to bring additional generation capacity online as quickly as possible to close the shortfall, including roping in independent renewable power producers.
In a bid to bring additional megawatts onto the grid, in 2021, Ramaphosa moved to lift the threshold for embedded generation by independent power producers without a licence, increasing it from 1MW to 100MW. Embedded generation — when a company produces electricity for its own use or for use by others — is widely regarded as the quickest way to boost energy supply.
Companies, mines and farms are believed to have 5,000MW in pent-up projects, which could be released if licensing requirements are lifted.
Business organisations and large users of electricity, including mines, have lobbied for the licensing threshold to be raised to at least 50MW.
Ramaphosa said Eskom was on track to complete its unbundling by December.
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