South Africa eases rules for small-scale power generation

South Africa has issued a new regulation exempting generators with a capacity of less than 1 MW from the need to obtain a license from the regulator. Many energy-intensive industrial groups such as mining companies were requesting deregulation of approval procedures to develop their own power capacities, to ensure reliable power supply in a context of rolling load-shedding episodes. They were calling for scrapping licenses for power plants up to 10 MW. According to the Mineral Councils - South Africa’s mining industry body - mining companies could develop 500 MW to 1,500 MW of self-generation capacity over the next few years once the sector is deregulated.

According to the Integrated Resource Plan until 2030, published in October 2030, there is a short-term supply gap of approximately 2 GW. This figure has recently been updated by South African power utility Eskom to about 3 GW. In December 2019, the Department of Mineral Resources and Energy (DMRE) launched a Risk Mitigation Power Purchase Programme, with the objective to procure between 2-3 GW of power generation capacity that can be connected to the grid in the shortest time at the least possible cost. Earlier in March 2020, the National Energy Regulator of South Africa (NERSA) issued two invitations to comment on the procurement by the Department of Mineral Resources and Energy (DMRE) of nearly 2 GW of new power capacity. Eskom, which accounts for more than 90% of South Africa's power generation, is struggling to ensure power supply due to defaults at its coal-fired power plants and is facing a ZAR 450bn (US$25bn) debt.