NERSA to publish SSEG rules soon

The Department of Energy published a notice regarding the licensing exemption and registration of small-scale embedded generation (SSEG) plant recently. In response, the National Energy Regulator of South Africa (NERSA) says it is in the process of finalising the draft SSEG rules which it will publish soon.

These rules were drafted in 2015, but put on hold in 2015 pending the publication of the Licencing Exemption and Registration Notice which were subsequently published in the Government Gazette, vol. 629, on 10 November 2017 (click here for an extract containing the particular section from the gazette).

The notice published by the Department of Energy, and signed by the then minister of energy, Mmamoloko Kubayi, adds some clarity to the terms of the exemptions permitted by the Electricity Regulation Act (Act No. 4 of 2006).

According to the Act, no one may operate any generation, transmission or distribution facility without a licence issued by NERSA. Neither may they import or export – or be involved in the trading of electricity – without a licence from the regulator.

Schedule 2 of the Act makes provision for some exemptions where it is unnecessary to apply for or hold a generating licence, namely:

  • Any generation plant constructed and operated for demonstration purposes only and not connected to an interconnected power supply
  • Any generation plant constructed and operated for own use
  • Non-grid connected supply of electricity except for commercial use

Definitions defined

The notice published on 10 November 2017 by the Department of Energy extends the definitions of the exemptions, although it insists that such exempt equipment (which the notice calls “facility” and the Act calls “plant”) be registered with the regulator. Since neither of these two terms (facility and plant) are defined by the Act, it is probably fair to assume that the two words can be used interchangeably.

These exemptions apply to the generation of no more than 1 MW of electricity for the uses listed above.

According to the Department’s notice of 10 November 2017, the electricity (up to 1 MW) may be wheeled through the national grid under certain circumstances. These circumstances include the generation of electricity for the sole purpose of supplying a specific customer or set of customers, where the operator or customer has entered into an agreement for the supply of electricity with a licensed distributor.

Own use, grid-tied

The notice exempts generation facilities which supply a single customer with electricity either directly or by wheeling the power through the grid as long as the amount of electricity does not exceed 1 MW and the generator or customer of that electricity has entered into a “connection and user-of-system” agreement with the holder of a relevant distribution licence.

Standby plant

Where electricity is generated privately for use as standby or back-up to supply power in the event of an interruption in the electrical supply, such generation may not operate for longer than the duration of the interruption of supply from the grid. Such private generation, if below 1 MW, does not need a licence but does need to be registered with NERSA.

Own use, off-grid

Exemption of the requirement for a generating licence where privately generated electricity will not enter the grid is simpler. The maximum amount of electricity is still limited to 1 MW; the electricity must be for the use of the person or organisation which generates it, or an organisation related to it; or the electricity must be supplied to a customer for use on the same property as the generation equipment.

Where electricity is generated for demonstration purposes, the electricity generated may not be sold and the operating period is limited to 36 months.

Electricity generated by means of waste or by-product from an industrial process is also exempt from a generating licence in terms of the latest notice, if it used solely by the owner of, or by a customer which is related to, the generation equipment and is on the same property as the generating equipment.

NERSA says it will publish the rules for small-scale embedded generation of electricity once stakeholders have been consulted and the regulator has made its decision. The regulator also says that it will start developing rules for the registration of all other categories of facilities referred to in the Department of Energy’s notice soon.

The rules for registration and for SSEG are important in the light of the ever-increasing interest in renewable energy generation in the industrial, commercial and residential sectors.


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