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Nersa finally initiates public process for concurring with Mantashe’s power determinations

18th March 2020 BY: Terence Creamer
Creamer Media Editor

The National Energy Regulator of South Africa (Nersa) published two consultation papers on Wednesday for two separate Ministerial determinations submitted by Mineral Resources and Energy Minister Gwede Mantashe in February for the regulator’s concurrence as required under Section 34 of the Electricity Regulation Act.

The determinations are required before new power generation capacity can be procured and built in South Africa.

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By releasing the papers, Nersa officially launched the public-participation process required by the Act before granting its concurrence.

A deadline of April 14 was set for the receipt of written submissions for the first paper, which deals with the determination for technology solutions to close an immediate 2 000 MW gap identified in the Integrated Resource Plan 2019 (IRP 2019), published in October.

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Nersa indicated that it would take three months to provide its concurrence on the first determination.

“The Energy Regulator will follow a fast-tracked concurrence process that will only take into consideration written comments from Stakeholders but will not have a public hearing where presentations may be made by interested and/or affected parties.”

The regulator would take a full six months, however, to provide concurrence on the second determination, dealing with the specific technologies set out for procurement in the IRP 2019.

A written submission deadline of May 7 was set, with public hearings to follow.

Nersa indicated that the date of the hearings would be announced only after the closing date for the submission of written comments and it indicated that five days had been set aside for the hearings.

Earlier in the week, the regulator indicated that it had instituted new protocols for public hearings in light of the Covid-19 pandemic, stating that it would “stream all its public hearings to prospective participants” but that those seeking to make oral representations would still be required to register.

Once the written and oral submissions had been made on the two papers, Nersa would collate the comments and take these into consideration when making its decision on whether or not to concur with the Ministerial determinations.

The concurrence process is the first to be undertaken for a Section 34 Ministerial determination since the Western Cape High Court ruled in 2017 that the concurrence granted by Nersa for South Africa’s nuclear programme was unlawful, owing to inadequate public participation and consultation.

The first consultation paper released by Nersa deals with Mantashe’s Section 34 determination aimed at closing the immediate supply gap of 2 000 MW, as identified in the IRP 2019 for the years 2019 to 2022.

The second deals with the specific generation technologies outlined for procurement in IRP 2019, including:

The market has been eagerly awaiting the initiation of the concurrence process after Mantashe indicated in February that the documents had been officially drafted and following a request for information released in December by the Department of Mineral Resources and Energy (DMRE) for solutions that could be “grid connected in the shortest time at the least possible cost”.

There has been much anxiety over the slow pace at which both the DMRE and Nersa were moving to implement the IRP 2019, which was published in October last year.

Anxiety levels have increased further since December when Eskom again resorted to costly load-shedding, owing to a deterioration in the performance of its increasingly unreliable coal fleet.

The State-owned utility has since indicated that load-shedding, which cost the economy up to R120-billion last year, is likely to remain a feature for the coming 18 months as it seeks to claw back years of poor maintenance at its coal power stations.

Some concerns have also been expressed about the content of the consultation papers, with some commentators, notably Professor Anton Eberhard of the University of Cape Town Graduate School of Business' Power Futures Lab, raising concerns over the nature of the questions posed in the papers.

Some questions appeared to second guess the IRP 2019 itself, while others were seen as inappropriate, such as asking stakeholders to comment on whether coal-fired generation should form part of the allocation for the period 2019 to 2022, when it is widely accepted that coal plants cannot be built in three years.

Concerns were also raised over the fact that Mantashe's actual Ministerial determinations were not published immediately alongside the consultation papers.

Nevertheless, there is also some relief that the concurrence process is finally under way.

Once Nersa’s concurrence was secured, the new generation capacity would be procured from independent power producers through one or more tendering processes. The second consultation paper stated that the designated buyer would be Eskom, while the procurer would be the DMRE. 

EDITED BY: Creamer Media Reporter
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