Regulatory Obstacles Hamper Power Developers Efforts

Power

Regulatory uncertainties are steamrolling the development of private power capacity in South Africa according to the head of the South African Independent Power Producers Association, Doug Kuni.

Kuni said that an illusion had been created over the power crisis being under control. In reality though, he estimates that South Africa still needs to close a supply gap of approximately 5 000 MW. This just isn’t happening though as there is a lack of urgency to clear the way for independent power producers (IPPs) being shown and this in turn is undermining investment and further lowering the country’s growth and job creation outlook.

“Eskom is doing all it can to keep the lights burning, but at what cost?” Kuni asked.

Before licencing an IPP by the National Energy Regulator of South Africa, a Ministerial determination, or exemption, is now required according to the Electricity Regulations on New Generation Capacity, as well as the Electricity Regulation Second Amendment Bill and the Independent System and Market Operator Bill. However, Kuni says that the preconditions for gaining a determination are not well defined and he already knows of several coal-fired power station licence applications being turned down because the applicants did not possess the required determination.

Kuni finished by saying, “If we want to make up the backlog in power generation capacity, we cannot rely on Eskom alone. So, the point of making life absolutely difficult for private power producers is a question that remains unanswered.”

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