Renewable energy producers must clear new Eskom hurdle to supply electricity to national grid

6 Dec 2023

Renewable energy players will now require permission and consent from Eskom if they want to build new energy projects that are located close to existing electricity grid infrastructure.

Renewable energy players that want to build projects to generate electricity and potentially supply it to the national grid now face another hurdle before they can do so.

They will require permission and consent from Eskom if they want to build new renewable energy projects close to existing electricity grid infrastructure.

This is detailed in a Government Gazette published on Monday, 4 December, by the Department of Forestry, Fisheries and the Environment, which has amended rules relating to new renewable energy projects under sections of the National Environmental Management Act and the Environmental Impact Assessment Regulations.

Any renewable energy player that wants to build a project has to, among other steps, undergo assessment from the department — a process that entails assessing the project’s impact on the environment.

The new rule requires that any renewable energy player that wants to build a new project must request and obtain a consent letter from Eskom if the project is located within “2km of a main electricity transmission substation” or “1km of a main electricity distribution substation”.

In seeking permission, players behind a renewable energy project must confirm that the proposed layout of the facility/project “will not unnecessarily obstruct access to the main electricity transmission or distribution substation”, reads the gazetted document.

The rule only applies to new renewable energy projects and not to any applications for environmental authorisation submitted before the publication of the amendment.

If Eskom does not reply to a request for a letter of permission/consent within 45 days, and if the applicant can prove they have followed up the matter with Eskom, the department will assume Eskom has no objection to the location of the renewable energy project.

Renewable energy players ideally want to set up and build their projects in locations that are close to electricity transmission and distribution infrastructure. This is more so if they want to generate electricity (mainly wind and solar photovoltaic) to connect to the national grid and ease Eskom blackouts.

There are already renewable projects or facilities that are centrally located near the electricity grid infrastructure. They benefit from this proximity; they also have the scale required to generate additional megawatts to connect to the national grid.

Unintended consequences

Arguably, the new/additional rule contained in the Government Gazette by the Department of Forestry, Fisheries and the Environment might have the unintended consequences of making it difficult for new entrants to gain a foothold in the energy generation and transmission industry.

Their renewable energy generation projects might not be centrally located if they do not receive consent from Eskom, placing them at a disadvantage when competing with peers who have existing projects located close to the grid infrastructure.

Daily Maverick asked a spokesperson for the department about the motive for the new/additional rule and whether it might have unintended consequences for new renewable energy entrants.

“The amendment is required to ensure that both main transmission and distribution electrical substations are not obstructed by the encroachment of development which limits the ability to serve several clients from the same substation,” the spokesperson said.

The department does not believe that the new rules will harm new entrants in the renewable energy space.

“It is possible that some renewable energy projects are located near main transmission and distribution substations and could be impacting on the connection capacity of the substation.

“The requirement for a letter of consent from Eskom is to ensure that the layout of both the renewable energy facility and the substation are complementary. This requirement will have no impact on any new entrants to the renewable energy sector other than ensuring the best layout of the facility in relation to the substation,” the spokesperson said.

Investments are needed to expand the grid, as the lack of grid capacity — and the design of the grid — are significant impediments to addressing Eskom blackouts and transitioning to renewables in South Africa.

There is no capacity in the existing infrastructure, mainly high-voltage lines, in the Western Cape, Eastern Cape and Northern Cape to connect to the grid the renewable energy produced by private players. These areas, with abundant natural resources, have many renewable energy players waiting to generate electricity and connect it to the grid but they cannot do so because of the lack of grid capacity and access.

Gauteng, Mpumalanga and KwaZulu-Natal are currently the only provinces that have the capacity for new renewable energy to be added to the grid.

Eskom estimates that 14,200km of extra high-voltage lines and 170 transformers will be needed by 2032 to accommodate new electricity generation capacity, which will mostly come from renewable energy. This is because Eskom might lose generation capacity in the coming years. After all, some of its coal-fired power stations will have to be retired once they reach the end of their life cycles.

Eskom estimates that it will cost R200-billion within the next 10 years to expand the grid — money the power utility does not have. So, Eskom and the government are looking to the private sector for capital to fund the expansion of the grid. DM

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Unintended consequences