Power game changes

Power game changes

Treasury allows Cape Town to buy electricity from homes, businesses Cape Town changes power game

In a potentially game-changing move, the National Treasury has allowed the City of Cape Town to buy privately generated electricity from households and businesses.

Cape Town is the first city to chart new ground as SA battles crippling power shortages.

Mayor Geordin Hill-Lewis on Tuesday said the National Treasury had granted an exemption for the city to pay private users who sold their excess electricity to the local grid. This was previously impossible due to limitations in the public finance law.

Hill-Lewis said the Treasury exempted the city from competitive bidding processes. The exemption also applies to competitive bidding provisions of the Municipal Finance Management Act to enable energy procurement from independent power producers. The city wants to shield its residents from load-shedding by buying excess power from self-generating homes and businesses.

"This has the potential to be a powerful force to end load-shedding over time, together with our independent power procurement programme and power heroes incentives for voluntary energy savings," Hill-Lewis said.

Energy analyst Chris Yelland said: "It seems like Cape Town is leading the way and putting the national energy crisis committee, Eskom and other municipalities in SA to shame."

Cape Town often reduces the impact on the city of load-shedding, thanks to about 180MW of power from the hydroelectric plant at the Steenbras Dam.

Regarding the exemption announced on Tuesday, businesses and, in time, residents will receive cash for selling their excess power into Cape Town’s grid. The city is looking to set up the infrastructure in the next couple of months.

The National Energy Regulator of SA (Nersa) has approved a rate of 78.98c/kWh for this financial year for the city to pay power sellers. The city adds a 25c/kWh incentive tariff on top of this.

Geordin-Hill said homes and businesses with small-scale embedded generation and other solutions will contribute to Cape Town’s goal of protection from four stages of load-shedding within three years.

"The future is now, as we aim to immediately roll out the paying of cash for power. Payments to commercial customers will be possible before June, and within the year for any Capetonian with the necessary generation capacity.

"If you’re thinking of investing in a solar system, it just got more attractive," he said.

"We will buy from as many customers as are willing to sell electricity to us. These customers may now produce as much power as they can and feed it into Cape Town’s grid.

"We will also pay an incentive over and above the Nersa-approved tariff."

The city would develop the infrastructure to allow cash payments within a few months.

It has allocated a R15m budget to pay for energy generated by small-scale embedded generators for the remainder of this financial year until June. It has also started a wheeling trial for commercial and industrial users, which is helping to iron out technical and billing issues ahead of mass-scale rollout.

Small-scale embedded generators "and wheeling customers who want to feed energy into the grid can purchase an AMI [advanced metering infrastructure] meter from the city. This is a bi-directional meter that allows accurate reporting of the amounts of energy consumed and generated", Hill-Lewis said. "We know this meter is still too costly for many, and we are working on finding an alternative option of comparable quality and reliability."

Yelland said "reactionary, backward-looking elements within government, the department of mineral resources & energy, department of public works, Nersa, Eskom and most municipalities have been intent on slowing progress and protecting the failing status quo for years".

The national government last year allowed the private generation of electricity of up to 100MW without needing a licence. President Cyril Ramaphosa said the pipeline of confirmed private embedded generation had a total combined capacity of 9,000MW.

The national energy crisis committee said on Saturday Eskom had developed and launched a programme to buy electricity from companies, with the first contracts expected to be signed within weeks.

R15m

budget for the rest of the financial year until June

104c

per kWh to be paid to small-scale generators