Energy reforms to allow municipalities to generate, buy electricity

Thursday, November 25, 2021

President Cyril Ramaphosa says as part of measures to improve electricity generation to deal with load shedding, municipalities will soon be allowed to generate and buy electricity from independent power producers to unburden the grid.

The President said this when he responded to oral questions in the National Assembly on Thursday.

“A number of the measures that we have taken and put in place include that there should be [an] independent generation of electricity, including by our local government entities.

“Local government entities play a critical role in the electricity system. Many of them distribute and they on-sell to residents and whilst it took quite a long time to finally get to this decision that municipalities should be allowed to generate as well as to buy from independent power producers, that’s exactly where we are now,” he said.   

Opposition leader John Steenhuisen asked if municipalities would be allowed to generate their own energy and to also buy from independent power producers. He also asked the President to provide further eemergency measures that government will undertake to augment the Republic’s electricity supply.

“We have given a clear direction and permission for local government to generate electricity… I’d like to see [municipalities] immediately move on to generate electricity so that we can de-risk this risk that we have of having one entity alone generating the electricity for the entire country,” the President said.

Generation recovery plan to tackle demand challenges

Responding to oral questions, the President said the recent load shedding, that has disrupted daily lives for millions of South Africans and which has also caused great damage to the economy, was in many ways a start reminder of the severe intractable challenges the grid faces.

He also said that load shedding is always the last resort where demand for electricity is greater than what can be produced by the system. It is necessary to prevent the collapse of the power grid and the complete blackout.

“At its core, load shedding is inevitable and it has inevitable consequences of the age of many of Eskom’s power plants and many will know that many of them are between 20, 30, 40 and 60 years.” 

The President said some of the reasons for load shedding have been due to the age of the fleet, some the debt and some lack of capacity and also some of the reasons would be as a result of state capture.

He said Eskom has to undertake the fundamental maintenance that is necessary to improve the reliability of our electricity supply. As Eskom continues with maintenance, load shedding will remain a possibility for some time to come, the President said.

He said government is not simply waiting for the inevitable.

“We are working hard in a number of ways to fix this problem.”

The President said Eskom has implemented a generation recovery plan to improve the availability of generating capacity. He also said that to minimise the risk of load shedding, measures are being taken to change the trajectory of electricity generation.

This includes separating Eskom into three subsidiaries – Distribution, Transmission and Generation. –