1/ It’s not easy for me to tweet this. I was a Board member of the National Energy Regulator of South Africa (NERSA) many years ago but they are not now serving South Africa as they should. Let me explain why in the thread below. Read this first nersa.org.za/wp-content/upl…
2/ South Africa is experiencing crippling power cuts which constrain economic activity and prejudice household welfare. We urgently need new power procurements and investment, especially now when our economy will be battered by COVID-19 as well
3/ South Africa has a highly regulated power system. NERSA determines the electricity tariff & approves market access through licences (>1MW for generators). NERSA can only approve generation licences if there is an allocation in the IRP electricity plan or the Minister agrees
4/ The Electricity Regulation Act allows the Energy Minister to make section 34 “determinations” on how much power should be procurred, when, from whom, from which energy sources, and who should be the buyer. And the Act also requires concurrence from NERSA
5/ The courts have affirmed that NERSA can only provide concurrence to Energy Ministerial Section 34 “determinations” on power procurements after public consultation. This is the process they’re initiating now. Here’s the document nersa.org.za/wp-content/upl…
6/ The Energy Minister sent his draft Sec34 “determination” to NERSA on how much power needs to be procured on 21 February 2020 (4 months after the IRP electricity plan was Gazetted). It’s taken NERSA another month to issue this consultation paper with responses due only 14 April
7/ This first Sec34 determination is for 2000MW to be procurred from a range of energy sources 2019-2022. However, we’re short of 7000MW (ref Eskom; CSIR) and DMRE’s RFI sought power options in the next months. Is there finally recognition that emergency power is not affordable?
8/ NERSA’s consultation paper does not incorporate the draft Section 34 determination for new power that the Minister intends gaEtting. Instead it poses a series of puzzling/bizarre questions
9/ Here’s a bizarre question posed by the NERSA consultation: “what do you think should be the dominant energy source in this allocation?” The official IRP 2019 electricity plan has already determined the optimal mix (AFTER public consultation). Now more interest-based opinions?
10/ Here’s another bizarre question in NERSA’s public consultation: “do you think that coal-fired generation technology should form part of this allocation 2019-2022?”
Let’s get serious. Coal plants cannot be built in 3 years, and probably not in 7 and struggle to be financed
Let’s get serious. Coal plants cannot be built in 3 years, and probably not in 7 and struggle to be financed
11/ In summary, NERSA seems to be living on another plant. We have POWER CUTS and ECONOMIC DAMAGE. Get real. Fast track. And Energy Minister @GwedeMantashe1 needs to provide leadership like @PresidencyZA @CyrilRamaphosa is doing on the COVID-19 response
Post script: as far as I can determine (I’ve emailed NERSA & interrogated their website) the regulator has issued only 1 new generation licence since 2016: i.e. apart from the REIPP4 projects which were procured in 2014/5, no major new investments >1MW as we experience power cuts
