Relief as Ramaphosa announces surprise energy reform plans

The government has taken the decision to considerably free up South Africa’s electricity generation market in an effort to resolve the country’s recovery-dampening energy crisis.

Charging ahead: President Cyril Ramaphosa said municipalities could approve grid connection applicants and that bids from solar parks were receiving attention. (Waldo Swiegers/Bloomberg via Getty Images)

The devil is in the details

Responding to the decision, energy expert Ted Blom said: “I think it’s very significant. It is also indicative of how serious the trouble is that Eskom is in. But the proof of the pudding is in the eating …. we will have to see.”

Blom said the decision has the potential to release Eskom’s stranglehold on industry. “It should certainly provide a lot of relief,” he said.

Clyde Mallinson, a geologist who focuses on the energy sector, agreed that the decision is “a massive relief”. But, he added, “the devil will be in the details”.

Because the announcement relates to self-generation, there are currently no clear-cut rules on how power projects will be allowed to sell energy to other companies, Mallinson said.

“Ideally as well, we would like to see that they would be allowed to sell it to multiple customers. If a company is able to build a solar farm, it would be great if they could sell 20% to Company A, 20% to Company B etcetera,” he said.

“That would be the major breakthrough. At the moment it looks as if Company A can’t even sell to Company B, nevermind to Company B, C and D.”

While the amendment is in “a fluid state of change, we must make sure that all of the necessary details get put in,” Mallinson said.

“It’s a massive relief that it’s been lifted. But when the rules are amended, they need to look at some of the details on the wheeling rules around ownership and who is allowed to be wheeled to.”

Subscribe to the M&G

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them.