- 2nd Aug 2023
- Posted by: Gil Harper
- Category: Uncategorised
Stakeholders normally see public policy for the first time when drafts are presented for public comment, but the Vuthela “Energy for Synergy” seminar took participants behind the scenes for a preview of what’s in store.
Participants at the recent “Synergy for Energy” seminar hosted by the Vuthela iLembe LED Support Programme were treated to a rare behind-the-scenes peek into how local government’s policy on renewable energy is being developed.
The KwaDukuza Local Municipality established an Energy Office to draft a policy around energy sources like solar power.
The policy is nearing readiness for public comment. It aims to address issues around safety and compliance and installation regulations. It will determine how the municipality plans to create an enabling environment for increased renewable energy in the KwaDukuza Local Municipality and how it will address any revenue losses incurred.
A presentation by Chimene Pereira, Director: Special Projects from the KwaDukuza Local Municipality’s Energy Office, took participants at the seminar into the backroom of the drafting process, providing insights into the various factors and complex dynamics that informed the final wording that details the policy.
The Energy Office was established in 2021 to assess the impacts of renewable energy on council operations and to consider the possibility of the council generating and selling energy on its own.
The policy will determine tariffs related to renewable energy projects and co-ordinate project proposals received from the private sector for IPPs (Independent Power Producers) and SSEG (Small-Scale Embedded Generation).
“Embedded Generators” are defined as entities that operate one or more generation units that are connected to the national electricity distribution system. “Small-Scale Embedded Generator” refers to a unit that produces less than 1 MW and “Medium-Scale Embedded Generation” is defined as an embedded generator with a capacity above 1 MW but below 10000 kVA (10 MW).
Changing municipal role
Pereira described how the role of municipalities in the energy value chain has changed. Municipalities now had to execute four main functions: as energy consumers, producers and distributors, investors in the energy sector, and motivators for efficiencies.
A team of policy drafters working behind the scenes had to answer several questions to ensure the policy supported these functions:
- How does the municipality plan to create an enabling environment for increased renewable energy in the KwaDukuza Local Municipality?
- How will it address any revenue losses incurred?
- How will the policy address the municipality’s diverse customer base, safety and certification, compliance, incentives and security?
- What will be the key benefits of the policy once it is implemented?
- What support or collaboration will be required from other stakeholders to finalise and implement the policy?
- How will the policy assist businesses and residents to protect themselves against loadshedding?
The drafting process had to be based on constitutional and regulatory requirements.
Electricity generation licenses are issued by the National Energy Regulator of South Africa (NERSA).
In January 2023 the Minister of Mineral Resources and Energy amended legislation that controls the generation of electricity. Facilities that provide standby or back-up energy during power outages and facilities that are not connected to the national grid are exempted from the requirement to apply for a licence and be registered with NERSA.
Business models
The policy is being devised with a raft of business models in mind:
Building generation capacity: rooftop solar Photo-Voltaic systems on municipal buildings and stand-alone power plants like wind and solar farms can be financed through the municipality, debt or grants. Public-Private Partnerships and special purpose vehicles can be formed between municipalities and partners.
Procuring energy: electricity produced by embedded generators like rooftop residential systems and Independent Power Producers can be purchased though feed-in tariffs, net metering and net billing or power purchase agreements.
Facilitation: municipalities can play a trading and facilitation role (wheeling) by buying electricity from local producers and selling it to consumers, operating a storage facility to store power in low use periods and installing and maintaining network systems, through tariffs and service fees.
For participants at the seminar, the background work, research and insights provided by the policy-making team contributed to a thorough understanding of the issues and the inter-related set of factors which need to be considered in the process of drafting the policy.
The draft policy will be open for public comment before being finalised and approved by the KwaDukuza Local Municipality, setting the scene for the installation and operation of renewable energy facilities in the district.
It will also serve as a potential model for other licensed electricity providers to consider.