Full-time member for electricity Thembani Bukula says the aim is to ensure an “orderly introduction” of embedded generation, which Nersa views as inevitable, notwithstanding the prevailing legislative impediments.
Currently, municipalities have the constitutional mandate to distribute and reticulate electricity and, while households and businesses do not require a licence to produce less than 1 MW for their own consumption, they are restricted from selling surplus power into the grid.
“We are not trying to change the Constitution, but even if local government does not want distributed generation, nothing prevents individuals and businesses from introducing rooftop solar, which reduces consumption from the grid,” Bukula argues.
“So distributed generation is going to happen anyway. What we want to ensure is that it happens in a way that is orderly and that stakeholders have had a meaningful participation on the issue.”
Embedded generation is changing the course of electricity provision internationally, with the extreme outcome being a situation where large utilities provide only back-up services to consumers, who otherwise generate their own power through solar, wind or other generation systems.
“That is the dynamic for which we need to create a regulatory environment,” Bukula explains, adding that a material rise in the number of domestic prosumers will have a major impact on the revenues of local government.
Such an effect has already been partly demonstrated in the City of Cape Town, which approached Nersa in 2012 to request permission for citizens in some of its affluent suburbs to begin feeding into the grid.
The city presented Nersa a list of 2 182 prosumers, who were willing to pay the upfront connection costs and for the meters required to measure bidirectional flows.
In the first year, the city agreed to pay these prosumers the equivalent of a municipal tariff. But subsequently, it has been requesting major reductions, owing to the revenue impact. The city has also sought to charge higher tariffs when demand returned during the evening peak.
Nersa is of the view that a regulatory framework is required to manage these changes, especially because municipalities still derive about 60% of their revenue and 40% of their surpluses from electricity sales.
“But the fact of the matter is that this is not going to wait for them to be ready,” Bukula avers, adding that the consultation paper will seek to outline a funding model that balances the competing interests of prosumers and municipalties.
Nersa is also finalising a consultation paper on the revision of the existing third-party access, or wheeling, rules.
These regulations are necessary for those entities that want to build a power station in one area, but to use Eskom or municipal infrastructure in order to consume that electricity in another location.
“We plan to work with all stakeholders to facilitate the wheeling of power by those that have the resources to buildpower-generation capacity.”
Nersa expects this consultation paper to be published before the end of 2014.