South Africa plans to lift the licensing threshold for small-scale power generation projects to 10 megawatts (MW) from 1 MW, a boost to firms anxious to curb their reliance on ailing state utility Eskom, but industry experts had hoped for more.
Africa’s most industrialised economy regularly suffers electricity outages because of faults at Eskom’s creaking coal-fired power stations.
But onerous regulations have prevented many companies, such as miners, from setting up their own generation facilities.
According to a notice published in the government gazette on Friday, “embedded generation” projects of up to 10 MW will be exempt from requiring a licence but will need to register with energy regulator Nersa.
The notice was signed by Mineral Resources and Energy Minister Gwede Mantashe and invited the public to comment on the proposed change.
President Cyril Ramaphosa promised that the licensing threshold would be raised during this year’s state of the nation address, as part of reforms aimed at ending the country’s power crisis.
At the time he said easing licensing requirements could unlock up to 5,000 MW of additional capacity.
Some power analysts said Friday’s proposed change was not enough.
Anton Eberhard, a University of Cape Town professor, said the president’s Economic Advisory Council had recommended the threshold be lifted to 50 MW. He said the notice did not cater for projects that want to wheel electricity across the transmission grid.
“The minister appears to have grudgingly made a minor step forward but has failed to recognise deep innovations in distributed energy resources and how the regulatory system needs to adapt,” Eberhard told Reuters. “South African electricity consumers are losing out and economic growth is being constrained through this short-sightedness.”
In February, miner Gold Fields(GFIJ.J)won approval for a 40 MW solar plant, four years after it first submitted a licence application. At the time its chief executive said the approval sent a positive message to investors, but analysts said more needed to be done to reform the electricity supply industry.