State-owned power utility Eskom has for long held a near monopoly in the SA electricity market, but recent changes to the laws and regulations that govern the sector have started to open the market up to competition.
As a sign that authorities are warming to the idea of a competitive electricity market, the National Energy Regulator of SA (Nersa) recently awarded one the first electricity trading licences that will allow a private company to sell energy directly to customers.
Nersa has granted Cape Town-based Enpower Trading a licence that will allow it to source predominantly renewable power from multiple independent power producers and small-scale generators, transport this energy across the national and municipal grid networks, and sell it to customers at a discount to prevailing electricity tariffs.
This is in line with some of the proposed amendments to the Electricity Regulation Act to open SA’s power grid to competition, with processes under way to separate Eskom into generation, transmission and distribution businesses.
The new electricity market structure outlined in the amendments will allow electricity to be traded between willing buyers and willing sellers on an hourly and daily basis, while licensed and registered generators may enter physical bilateral contracts for energy production with customers and traders.
According to Enpower Trading it is only the second private electricity trading company in SA to be granted a trading licence by Nersa.
Important step
Company director Charl Alheit said they hope this will enable them to provide much-needed additional generation and storage capacity, and to help foster an efficient power market by offering offtake solutions to independent power producers, competitive tariffs to customers, and sustainable energy supply to municipalities.
“Our licence is a very important step that is aligned with the government’s aim to liberalise the SA energy market. We are proud to be a part of this process and fully support these recent changes in legislation,” said Alheit.
Enpower Trading said in a statement that the amendment made to the Electricity Regulation Act in 2021 exempting embedded electricity generation projects between 1MW and 100MW from the previous requirement of applying for a generation licence, requiring them only to register with Nersa, will help increase the availability of independently produced renewable energy.
Enpower’s strategy will be to sign energy offtake agreements with Nersa-registered independent producers, which are connected to the municipal or Eskom grid. A certain amount of electricity will be traded at an agreed rate between Enpower and a municipality.
The company said that customers who sign a power purchase agreement with Enpower will receive a lower tariff than the existing Eskom electricity tariffs and will also be subject to lower annual tariff increases.
Last year, Overstrand municipality in the Western Cape signed a use-of-system agreement with Enpower, pending approval from Nersa, according to which the company will compensate the municipality for the use of its networks and municipal sub-charges.
The municipality said at the time that the agreement would enable Overstrand to take advantage of the new energy regulations to transition from dependence on Eskom to renewable energy.
Even though the municipality will not be able to break away completely from Eskom, the agreement will help lessen the effect of load-shedding on local businesses and residents.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.