South African energy regulator issues electricity registration procedures

Out-Law News | 16 Nov 2021 | 2:36 pm | 2 min. read

The National Energy Regulator of South Africa (NERSA) has published details of the registration procedures required for electricity generators that are newly exempt from the country’s licensing regime.

The publication of the procedures, which are available from NERSA, follows amendments to the Electricity Regulation Act (ERA) exempting embedded power generation projects with a capacity of up to 100MW from the need to obtain a generation licence. While these projects no longer need a licence, they must register with NERSA and pay a registration fee. The registration procedures provide that the application must be submitted by the operator of the generation facility and the fee is set at R200 (US$13) per generation facility. 

Energy law expert Emma Dempster of Pinsent Masons, the law firm behind Out-Law, said the registration procedures were more administrative and overreaching than the market expected. Applications will be subject to an evaluation process, which includes an economic analysis which appears to be open-ended. 

NERSA said once an applicant has submitted its application, an analyst will evaluate the document, preparing a draft decision and reasons for decision document and a draft registration certificate with relevant registration conditions.

The evaluation process will take 45 days and include an evaluation of areas including, but not limited to, the generator’s technical parameters such as the installed capacity, type of technology and grid connection details.

The analyst will also carry out an economic analysis based on the economic benefits of the generator, such as employment during construction and operation.

If applicable, the generator’s power purchase agreement (PPA) will be evaluated by extracting or summarising the legal parameters that illustrate points such as contracted capacity, tariff, contract term, dispute resolution and metering.

Dempster said the basis upon which NERSA will undertake an economic analysis of the project and the reasons for doing so were unclear.

“Presumably this is intended to ensure that the application is not contrary to the objects of the ERA as provided for in section 9(43) of the registration procedures, but it is difficult to see how this would be the case in the absence of further clarification,” she said.

She said the ERA did not suggest that registration would be subject to an economic analysis, or that NERSA would be able to reject the application on economic grounds.

“Clarification will have to sought from NERSA as to the intention behind the inclusion of such economic analysis as a condition to the registration procedure and how this will be analysed,” Dempster said.

NERSA said it would take around two months for an application to be approved once it was submitted. Dempster said this would need to be factored into development timelines, with generators needing to take into account that any PPA must be finalised before an application is submitted.

The registration procedures also set out the responsibilities of network service providers under the ERA, and the requirements for NERSA to publish an annual report on registered generation facilities – including details of any complaints or incidents related to registered entities.