Gwede Mantashe says power needs limit to avoid 'chaos'

Mineral resources & energy minister Gwede Mantashe has told business that allowing entities to generate their own electricity beyond 10MW and sell it to back to the grid, municipalities or private users without a licence would create chaos.

Mantashe met with Business Unity SA (Busa) on Friday to discuss concerns over energy security, and to explain why the government is limiting the threshold for embedded generation projects to 10MW without the requirement for licensing. Amendments to the law were gazetted towards the end of April and are open for public comment.

Organised business has expressed disappointment as it was hoping the government would set the threshold at 50MW.

Mantashe told the Sunday Times yesterday that no country would allow a situation where it could not track how much energy was being generated and sold.

"They [business] want an unlimited amount to trade with energy, and that is going to cause chaos. We will not be able to quantify the impact accurately. You can't have that; it's not happening in any society."

The absence of constant, reliable energy has been cited as the biggest impediment to economic growth in SA.

Continuous power cuts by Eskom through load-shedding have resulted in increased calls for the government to allow more independent generation of electricity.

In his state of the nation address, President Cyril Ramaphosa said easing licensing requirements for new embedded generation could unlock up to 5,000MW of additional capacity to ease the impact of load-shedding.

Mantashe said he was confident the gazetted 10MW threshold would help unlock this additional capacity, but those who want to trade in electricity beyond this have to be licensed by the National Energy Regulator of SA (Nersa).

Mantashe was taken to task this week after claiming in his department's budget vote speech that the decision to set the threshold at 10MW had been determined through a survey of 10,000 people. His department later issued a clarification saying it had not conducted a survey but had based its decision on public comments received in the consultation process.

Energy expert Anton Eberhard said the 10MW threshold is too low. "The current wording around licence exemptions is very confusing around this issue and needs clarification so that sales back to the grid or direct sales are possible."

Fanele Mondi, CEO of the Energy Intensive Users Group, said it agreed that uncontrolled expansion of the system could compromise the grid, but the 10MW threshold is too low to attract sizeable investment.

Busa's Martin Kingston said Mantashe had assured them the government would make the licensing process less onerous. He said business would want the threshold to be reviewed if there was more demand for embedded projects at higher megawatts.