Cape Town is offering Cash for KiloWatts - Increases demand for energy generation products

Increased demand for energy generation products

South Africa’s Western Province capital Cape Town is making local power history as they have given the go ahead for businesses and residents to not only supply their excess generated electricity back into the grid, but are willing to pay for it. This is a feat which is unprecedented on South African soil and therefore calls for some reshuffling of legislature in order to ease the burden that tax payers are feeling from regular rolling blackouts. This comes with the exemption of Cape Town, from particular, public finance laws in order to procure energy from independent power producers instead of solely relying on the state-owned entity Eskom.

In a  statement by Cape Town Mayor, Geordin Hill-Lewis, he addresses how the future is approaching fast and how eager they are to take advantage of household and business owned solar systems in order to appease the stress placed on the national grid. He goes on to elaborate on the type of power that will be applicable. These include Small-Scale Embedded Generation (SSEGs) which are common in households which are partnered with Advanced Metering Infrastructure (AMI) meters which must have been installed by the City.

While the City is allowing taxpayers to generate as much electricity as their personal scale will allow them to and pump it back into the local grid for a small kickback, they also are willing to incentivise them by adding a further pay out to those who get involved and play their part in the turning the treacherous ship which is load shedding. Mayor Hill-Lewis is confident that with this in place as well as an Independent Power Procurement Programme, the capital will be able to not only move further away from a state grid, but boost their “City’s energy security”.

“The tariffs set out by The National Energy Regulator of South Africa (NERSA) have been approved and published at a rate of 78,98c/kWh for this financial year [2023/2024]. With regard to the incentive, they further approved a rate over and about this of 25c/kWh, ultimately making the appeal back up power and energy reserves even more attractive.”

The City has outlined some impressive groundwork on the implementation of this model and are eager to get it off the ground by disclosing its action plans, policy changes and budget set aside to ensure the possible financial commitment of this energy revolution is met. With R15 million set aside until the end of this financial year, consumers and businesses can be sure to see their financial investment reaping the rewards.
On the record, Mayor Hill-Lewis noted that the competitive bidding process that usually comes with allowing private generation of electricity and applications which need to be submitted through section 3 of the Preferential Public Procurement Framework Act (PPPFA) would yield more work which would only slow down the process and contribute to loss which Eskom is facing daily. He furthermore supports the exemption from a finance point of view as this stipulated budget is smaller than that of which Eskom stands to lose: 

“The result is an insurmountable admin burden not suited to the dynamic, decentralised process of buying and selling electricity that is wheeled into the grid by a great number of small-scale generators all of whom are being paid at the same price (and at a cost that is cheaper than Eskom).”

Although Cape Town may be making immense progress in irradicating the energy problems that Eskom faces, what does it mean for the rest of the country? 

Although Cape Town may be making immense progress in irradicating the energy problems that Eskom faces, what does it mean for the rest of the country?

With more households and businesses turning to their own energy production, exponential growth can be seen in products relating to energy generation, battery storage and solar panels. This growth has created a spike in foreign investment of funds and equipment both in small quantities and larger ones. The need for affordable and reliable backup power and electrical meters to manage these is a need which is developing faster than technology can keep up, giving rise to credible and eager “energy-preneurs”.

With this new exemption taking centre stage in the news, investors of all forms are quick on the ball to see how they can get a piece of the action and seize a market which is only set to improve with the electricity situation. Enterprise Africa is an eCommerce platform like no other, focusing on the business sector and offering the opportunity to tap into the African market and see how your international product can effect, seize and better the ever-increasing opportunities that Africa has to offer.