Nersa proposals alarm industry

Alternative energy businesses fear backlash

Rory Stear
Rory Stear

Retailers of off-grid electricity generation say the proposed rules by the industry regulator will be impossible to police and will affect their bottom line negatively.

A new draft proposal by the National Energy Regulator of South Africa (Nersa) that requires consumers of renewable energy to be registered, has been met with widespread dismay by Nelson Mandela Bay industry players.

They believe Nersa’s plan to have all forms of electricity production under 1MW registered will not only deter people from using renewable energy sources, but also add even more red tape to the industry.

Last month, the cabinet announced that it had approved a draft consultation paper from Nersa for all domestic, commercial and industrial customers who use sun, wind or generators to produce electricity to be registered.

The new rules apply for people both on and off the grid.

Blackwood Power chief executive Rory Stear said the proposed rules could hamper the industry’s potential to create jobs.

“Every time we have an overreach of bureaucracy, it can’t be helpful to free trade,” Stear said.

“I think renewable energy is such a critical industry in job creation.”

Although bigger companies were likely to handle the registration process on behalf of new clients, Stear said this cost would be included in the price of solar panels, making this a more expensive option for consumers.

“I think Nersa should stick to regulating tariff costs and not trying to cover up what are clearly the inefficiencies of Eskom.

“It’s time to focus on winning [Eskom’s former success] back rather than punishing emerging industries that are part of the solution.” Rubicon sales director Greg Blandford said the draft regulations could hold dire consequences for the industry.

“It would definitely cause civil disobedience. Many people have already invested in renewable energy and for them to register . . . would be similar to the e-tolls in Gauteng.”

He said the proposal would work against the industry’s goal of creating sustainability. Microcare sales and marketing manager Gareth Burley said the industry would definitely take a knock, but that the regulations could also bring benefits.

“There are a lot of fly-by-night [installers] who give the industry a bad name,” Burley said. “A level of regulation could put a stop to that.

“On the other side, it could deter people [from considering renewable energy] as there will be more hoops to jump through.

“[Nersa shouldn’t] punish those who are doing a good job.”

Nersa spokesman Charles Hlebela said the regulator had not decided on what registration would cost, but that those affected would have to enter into a connection agreement with electricity distributors before applying to Nersa. Those who did not comply could be cut off, he said.

“Network service providers will not connect them or, if the smallscale embedded generation will constitute dual connection, the NSP [the service provider] may disconnect its supply.”

South African National Energy Association chairman Brian Statham said the consultation paper was too broad in its intent in that it covered equipment both connected and not connected to the grid.

“This seems to be an overkill and unnecessary in terms of regulating the integrated electricity industry.

“It is not clear how Nersa will benefit from collecting all this information and the real value added,” Statham said.

The proposal has been opened for public comment.