Legalbrief, 5 March, 2019
At a local level, cities are waking up to benefits of renewable energy. For instance, the City of Cape Town mayoral committee member for energy and climate change, Phindile Maxiti, said last week that the city would petition the Gauteng High Court (Johannesburg) to allow not only Cape Town, but other municipalities to be able to purchase energy from IPPs. According to aNews24 report, Maxiti said: ‘We are doing everything possible to move away from sole reliance on Eskom for our energy needs, while, at the same time, trying to become more resilient and sustainable through the use of cleaner energy, such as renewable energy and transitional fuels such as natural gas.’ In 2017, the city served the Department of Energy and the National Energy Regulator with court papers challenging the so-called ‘single-buyer’ model, whereby Eskom is given exclusive right to produce electricity from generators of electricity for resale, including electricity from renewable energy IPPs. ‘The price of power generated from IPPs would differ based on technology and the procurement process to be followed if the court case is successful,’ Maxiti said. The city wants a section 34 determination, in accordance with the New Generation Capacity Regulations in the Electricity Generation Act, to allow them to procure up to 400MW of renewable energy from IPPs. ‘Metros must become the energy champions of their residents and of their commercial sector players,’ she added.
Maxiti said if the city was allowed to procure renewable energy, it could reduce long-term costs for residents. ‘Currently, 65% of the tariff we charge customers goes towards the cost of buying electricity from Eskom,’ she noted. But, notes a Cape Argus report, renewable energy consultant David Lipschitz said the city has excluded homeowners and businesses who are IPPs. ‘The city is not allowing people to be “negative”. That means it is not prepared to pay homeowners for additional electricity they feed into the grid,’ he explained. If the city bought from IPPs, they should do so from homeowners and businesses too, he said. According to Lipschitz, roof-top generation was less hassle as environmental impact assessments were not needed and a 10kW system took a few days to install. ‘Imagine if the R500bn wasted at Eskom over the past 10 years had gone into incentives for such IPPs. The electricity and jobs landscape would be entirely different,’ he said. This week, on 7 March, Nersa will announce Eskom’s fourth multi-year price determination of tariffs for three years from April 2019 to March 2022.