The National Transmission Company South Africa SOC Ltd (NTCSA) has received the Market Operator Licence which bring the country closer to establishing a competitive market for electricity provision.
“The NTCSA today received approval from NERSA of its Market Operator Licence application, marking an important step toward establishing a fair, competitive market for electricity in South Africa,” the NTCSA said in a statement on Thursday.
Having commenced trading last year, the NTCSA is wholly owned subsidiary of Eskom and will own and operate the country’s national transmission system, the world-class System Operator, the grid strengthening function and energy market services among others.
In March last year, the NERSA announced that it had approved Eskom’s application for a transfer of its powers and duties related to section 34 Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) to the NTCSA.
The as the license was granted by the National Energy Regulator of South Africa (NERSA).
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The purpose of the Market Operator Licence is to authorise the NTCSA to operate and administer a new electricity market platform in accordance with the Electricity Regulation Amendment Act (ERAA).
The approval of the licence enables further progress toward a transparent, non-discriminatory trading environment that allows a wider range of participants to compete on equal terms.
“This is a significant milestone for South Africa’s evolving electricity sector. A competitive market will unlock economic and societal benefits over time by broadening participation, stimulating investment in new capacity, and enhancing long-term system resilience. We welcome also the creation of the Electricity Market Advisory Forum (EMAF) and the Grid Capacity Allocation rules” said the transmission company’s Chief Executive Officer, Monde Bala.
Bala said the entity which is the transmission arm of Eskom has undertaken extensive engagement on the Market Code with stakeholders across the sector.
“With the Market Operator now licenced, the next step is to finalise the Market Code and submit it to NERSA for its consideration and approval, thereby establishing a clear and stable rules framework for the operation of the future electricity market,” said Bala.
Finalisation of the Market Code
With extensive preparatory work already completed, the NTCSA will now focus on finalising the Market Code for submission to NERSA, which makes the final decision on approval.
The NTCSA has ensured the proposed Market Code reflects broad stakeholder input and supports the transition to a competitive marketplace.
“The NTCSA will await the licence conditions and reason for decision and will submit any further information required by NERSA relating to potential conflicts of interest and independence within the context of the market development roadmap,” said the NTCSA.
Eskom welcomes NERSA decision
Meanwhile, Eskom has welcomed the NERSA decision to award a Market Operator Licence to the NTCSA as the next step to establishing a market for electricity and delivering competition.
“The awarding of the Market Operator Licence to the NTCSA represents significant progress in establishing a competitive electricity market in South Africa. It aligns with global best practice, supports a level playing field for market participation and enhances certainty for investors looking to bring new capacity into the system,” said Eskom Group Chief Executive, Dan Marokane said.
In its statement on Thursday, Eskom said the decision is an important milestone in the country’s energy reform agenda and in building a power system that is more secure, better run, and open to wider participation.
“With the Market Operator now licensed, and following extensive engagement on the Market Code already undertaken with stakeholders, the necessary structures are in place for its finalisation and submission to NERSA who provides final approval.
“Further, the publication of the grid allocation rules will provide a clear basis for performance reporting to all stakeholders, and the Electricity Market Advisory Forum will play a vital guidance and advisory role. This sends a strong signal to investors that the country remains committed to a rules-based transition to a competitive marketplace,” Marokane explained.
The ERAA provides the legal foundation for restructuring the electricity sector. It mandates the establishment of a fully independent Transmission System Operator (TSO) within five years, while allowing NTCSA to temporarily fulfil certain TSO roles during the transition.
“Eskom is implementing the building blocks to ensure this is achieved within the anticipated timelines. Eskom has transitioned from a single, vertically integrated company to a group structure.”
The power utility said it will manage the changes responsibly, in partnership with government, regulators, organised labour, municipalities and all relevant stakeholders.
“A structured engagement process is underway to keep stakeholders informed, safeguard power system stability and support employees throughout the unbundling journey,” it said. -SAnews.gov.za
