The approval of SA’s first import-export licence for electricity trading is an important milestone in creating an integrated regional competitive electricity market, said Ana Hajduka, CEO of the licensee Africa Greenco.
Africa GreenCo is the first private member of the Southern African Power Pool (SAPP), a co-operation of the national electricity companies in Southern Africa under the auspices of the Southern African Development Community (Sadc). The 12 members of SAPP have created a common power grid between their countries and a common market for electricity in the Sadc region.
Energy regulator Nersa on Tuesday approved the license and new domestic trading licences after a protracted process.
The mismatch between Eskom’s requirements for the use of its transmission system and Nersa’s licence requirements contributed to the delay. Nhlanhla Gumede, Nersa full-time regulator member for electricity, said this had been resolved.
The regulator dismissed objections from Eskom to the four domestic licences, awarded to Africa GreenCo, Green Electron Market (GEM), CBI Electric Apollo and Discovery Green.
Eskom argued that the traders would operate in areas that were exclusive distribution areas in terms of its licence. Nersa, however, clarified that trading licences were valid nationally and the regulator did not approve distribution licences, but merely licenses the operation of distribution networks. While only one distribution network is allowed in a specific area due to health and safety considerations, such licences exclude trading.
Nersa at its regulator meeting decided to develop frameworks and rules for domestic and regional trading to give clarity about what is allowed. Gumede said this would assist in the move from mostly bilateral trading to traders supplying multiple customers. The trading licences are valid nationally, but traders must come back to the regulator when they want to add more off-takers to their portfolio.
Hajduka said Africa GreenCo, which was first established in Zambia in 2019 with the assistance of the Zambian government, had experience in a competitive market and wanted to help SA in moving towards that.
The National Transmission Company of SA (NTCSA), a subsidiary of Eskom, hopes to have a competitive wholesale market in operation by 2026.
The Zambian energy market was the first in the region to liberalise its electricity market and Africa GreenCo had to wait for regulatory changes before it could move to other markets, said Hajduka. It first expanded to Namibia, then to Zimbabwe and now SA.
The company has a 25-year power purchase agreement (PPA) with the Dubai-based Amea Power for the supply of 85MW of solar PV from a plant to be constructed in the North West. It plans to build a portfolio of multiple customers and has already signed an agreement with mining group Sibanye-Stillwater as its first off-taker.
Hajduka said Africa GreenCo was also in negotiations with Eskom to supply electricity to the utility in terms of its standard offer.
Africa GreenCo would mitigate the variability of renewables using Eskom’s and its own supply, as well as electricity from the SAPP.
She said it was understandable that Eskom would be concerned about the loss of sales volumes and revenue as more of its large power users signed agreements with electricity traders. Eskom was no exception in this regard as utilities worldwide had the same concerns when their markets were opened to private players.
Africa GreenCo wanted to work with Eskom to show the utility the benefit of monetising its network through network charges. “Eskom’s overall revenue will not decline if it is properly compensated for its network services,” Hajduka said.
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