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Out-Law Analysis 4 min. read

South Africa’s energy ‘one-stop shop’ to tackle its energy crisis

Wind turbine Western Cape South Africa

iStock.com/Nico van Blerk

Last month, the South African Department of Trade, Industry, and Competition (DTIC) announced the launch of an ‘energy one-stop shop’ (EOSS) to reduce the red tape surrounding energy projects.

These plans include speeding up the release of regulatory approvals and permits that energy developers are required to obtain prior to commencing with the development of an energy project. The DTIC said the EOSS will expedite approval times through timely interventions which eliminate blockages and reduce the time and cost of onboarding projects onto the grid.

The DTIC has stated that the launch of the EOSS is part of government’s wider initiative to refocus resources and add a greater supply of power to the grid, including renewables. Moreover, the DTIC said that the EOSS will help overcome the obstacles that are faced by industries because of energy poverty, and that the EOSS will ensure a resilient business environment and fast-track private sector investments within the energy generation market and thereby obtain energy security. 

Cutting delays to approvals and permits

In recent times, South Africa’s energy industry has complained about the protracted waiting periods which independent power producers (IPPs) have been made to endure in order to gain several approvals and permits that are required for power generation. The industry has flagged this phenomenon as a hindrance towards the attraction of greater investments in South Africa’s renewable energy sector.

Presently, IPPs are subjected to 12 different authorisation processes, which can take up to a year or more to produce a final outcome. However, the EOSS aims to change this through implementing processes that are intended to accelerate renewable energy projects and expedite the addition of new megawatts to the grid.

The CEO of South Africa’s Energy Council, James Mackay, said that the EOSS will help to reshape the country’s energy sector regulatory landscape, and this is a welcome intervention considering the fact that the current power regulatory framework is devoid of direction, speed, scale and a “national capacity to implement”.

Prospective energy investors should take advantage of this initiative and use the services at EOSS to swiftly acquire the necessary approvals for their projects. Doing so will help highlight any inefficiencies with the approval process and help to eliminate flaws in the system.

If the EOSS does allow developers to obtain faster approvals, they will also be able to save costs, since delayed approvals are notorious for increased project costs, and use the savings to increase their profit margins or invest in other ventures.

The head of the national energy crisis committee (NECOM) and manager of projects in the presidency, Rudi Dicks, believes that there has already been marked improvement in respect of achieving better turnaround times for various project approvals. This includes exempting new and existing solar projects that are located in low- to medium-environmental-sensitive areas from certain environmental requirements.

Additionally, the registration of private generation projects is said to now be completed within 19 days, instead of the normal period of three months. The Department of Water and Sanitation has also managed, in some instances, to process water licenses for solar and wind projects in three months, instead of the usual duration of ten months.

Implementation of the EOSS

The DTIC says that the EOSS will be rolled out in four phases. The first phase is already completed, as the EOSS now has personnel, a registration portal for power projects, a website, and a mapped process which allows the IPP to track where its application is in the approval process.

Notably, once projects are registered on the portal, a government branch, called Invest SA, will manage the process of expediting approvals. Invest SA has already identified 26 projects that will enjoy accelerated approval. These projects will add about 2,240 MW to the grid between 2023 and 2025.

The second phase entails building capacity at both a provincial and municipal level, while the third phase will include the installation of a single electronic application process which will produce better automated feedback. The fourth and final phase will see the EOSS become a fully-fledged operation which both covers immediate blockages and catalyse a wider reform programme.

The DTIC has invited IPPs to use the facility and give their honest feedback to the EOSS on both the technology and human resources, so the DTIC can implement improvements to the facility.

The energy crisis response plan

In July 2022, President Cyril Ramaphosa delivered a speech on how the government intends to resolve the energy crisis and outlined an energy crisis response plan. A key feature of the plan entailed the establishment of a single point of entry for all energy-related applications to achieve effective coordination of approval processes across government. He also instructed departments and entities to review existing timeframes and to ensure that applications are urgently processed.

The roll-out of the EOSS is happening as a consequence of the government’s energy crisis response plan. The EOSS will assist the DTIC with the achievement of its desired objective in respect to overcoming the country’s 6GW energy shortfall in generation capacity, and incentivising IPPs to invest in more power projects through availing expedited approval processes, and create a business-friendly environment.

South Africa can move this initiative further, however, by emulating Australia. The Western Australian government established a body, similar to the EOSS, called the Green Energy Assessment Unit (GEAU) to accelerate green energy approval processes in Australia.

But the Australian government went further by establishing groups of experts to ensure the success of GEAU. A green energy major projects group, for example, acts as an initial port of call for investors and assists them with the approval process. Additionally, there is a green energy expert panel dedicated to advising the Environmental Protection Authority in relation to implementing timely approvals.

The South African government can adopt a similar approach by hiring a team of experts whose focus will be to guide energy investors on how to navigate the approval process and provide EOSS with information which is required to attain prompt approvals.

The future of the EOSS

The establishment of EOSS is a welcome development and crucial to enticing bigger investments in South Africa’s renewables space, because of the expedited approval times.

But it remains to be seen whether the government can move with urgency to roll out the remaining three phases of the EOSS. Ministers must also show the willingness to remove inevitable inefficiencies within the untested system as soon as they are identified.

The success or failure of the EOSS will likely come down to these factors.

Co-written by Njabulo Gumede of Pinsent Masons.

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