In June 2021, South Africa’s president Cyril Ramaphosa announced that South Africa’s private electricity production threshold was increased to combat the country’s electricity shortage.
This was done by amending Schedule 2 of the Electricity Regulation Act to increase the threshold for private power project generation licence application from 1 MW to 100 MW.
In 2022, the first results of this change in the legislation are becoming visible.
Registration of two 100 MW solar projects complete
In May 2022, the first two private 100 MW solar projects following the announcement were registered by the National Energy Regulator of South Africa (Nersa).
The two projects are located in the South African province North West and will generate electricity for Mining company Tronox Mineral Sands. Both projects are being developed, financed, built and operated by the Sola Group.
Financial closure of the projects, for which registration took place 73 days after application, is expected in July and construction is expected to take 14 months. Afterwards, the projects are expected to run for 30 years.
Outlook of power generation in South Africa
Sola Group CEO Dom Wills said that after 95 years of South Africa’s power supply being controlled by the government, it has moved quickly to move to allow substantial private production. While this development is applauded, Wills pointed out that it will take time to start seeing results. The solar farms, that include 600 000 to 700 000 solar panels and cost about R3 billion should start contributing to the national grid within the next 16 months.
Additionally to these projects, the Sola Group is able to support a few projects like these each year, according to Wills. While the government is procuring as much as possible themselves, Wills admitted that they will need assistance by Sola Group as well as their competitors, as there is a long way to go for South Africa to reach the required amount of solar power generation while phasing out coal in the next 13 years.
The implementation of the two 100 MW projects is a first step that, according to Wills, will pave the way for many more large-scale private projects to receive approvals to contribute to power generation on the grid and is a signal to the market that private power generation is possible and that there are eager private financiers to support these projects.