South Africa’s electricity crisis is worsening. The appointment of a special minister in the Presidency to oversee Eskom is unlikely to make any difference to the situation. The government was told – repeatedly – that the only solution is the procurement of more electricity generating capacity.

The private sector has offered to help but is often restricted by unhelpful, and usually unnecessary bureaucratic procedures and limits. Instead of welcoming the help, the minister of energy, who’s responsible for ensuring that the country has sufficient electricity to support a growing economy and make the ruling party’s National Development Plan a reality, made unnecessary and factually inaccurate statements about the electricity crisis, suggesting, for example, that additional procurement was unnecessary because “Eskom has 20 000 MW lying idle”.

But last year, the president of South Africa suddenly announced a hundred-fold increase in licence-free embedded generation of electricity. And in March this year, the minister of finance announced that tax rebates will be available to those individuals and businesses that invest in PV solar panels for self-generation.

The rationale behind these surprising announcements it seems, is that the government has come to the realisation that it is unable to improve the electricity situation and that users should fend for themselves.

However, should businesses and individuals take these offers up, they are likely to generate more electricity than they would be able to use and would want to be able to share the surplus with their neighbours or with the municipality or Eskom via the distribution grid.

Moreover, they would want to benefit financially from doing so.

Therefore, some form of buy-back scheme needs to be put in place. There are two ways of achieving this: feed-in tariffs and net-billing (also known as net-metering).

• A feed-in tariff is defined as a payment made to households or businesses generating their own electricity through the use of methods that do not contribute to the depletion of natural resources, proportional to the amount of power generated.
• Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid.

The principal difference is a payment being made or a credit being passed to the home- or business owner.

It appears that South African lawmakers would prefer the passing of credit, so Nersa, the National Energy Regulator of South Africa, is looking into forming a framework for net-billing guidelines.

The regulator says that the Proposed Net-Billing Framework document aims to provide guidance to distributors of electricity as to how they should develop net-billing tariffs and sets out the principles under which net-billing tariffs can be produced using a standardised approach.

Net-billing is a mechanism used to compensate customers when the customer’s generation is synchronised with the grid (grid-tied) and some energy is exported. This compensation is based on an export tariff. The customer still gets charged a full tariff for energy consumed and capacity provided.

The utility or another party does not purchase this energy; the energy still belongs to the customer using the distribution grid as a bank. Net-billing can be easily implemented, provided bi-directional metering is installed, tariffs are properly unbundled, and the export tariff is set at a rate that is equal to the avoided energy purchase cost.

Objectives

The following are the objectives of a net-billing tariff:

• To provide customers with the option to get credited for exported energy through a simple process of crediting on the electricity bill.
• Low administrative overheads for customers and the utility.
• Export tariff to be low enough to not create an additional burden to overall electricity costs but high enough to provide an incentive for timely generation of electricity.
• High security of investments into small-scale embedded generation (SSEG) as it's linked to retail tariffs.
• Fair coverage of costs of grid usage through properly structured tariffs for consumption and demand.

To this end, the regulator is inviting comments on its proposal.

INVITATION TO COMMENT ON THE NET-BILLING RULES DEVELOPED BASED ON THE NET-BILLING FRAMEWORK DEVELOPED BY NECOM

The National Energy Regulator of South Africa (Nersa) has, in terms of section 5(1) (k) of the Disaster Management Act (Regulations published on 27 February 2023), developed draft net-billing Rules. On 5 April 2023, the energy regulator published a consultation paper on the draft net-billing rules. The consultation paper, the draft net-billing rules and the draft net-billing framework are available on the Nersa website (under ‘Consultation>Notices> Electricity’). Stakeholders and members of the public are requested to provide written comments on the draft net-billing rules.

Written comments must be submitted to Nersa for the attention of Moefi Moroeng, net-billing@nersa.org.za

They can also be hand delivered to The National Energy Regulator of South Africa, Kulawula House, 26 Madiba Street, Arcadia, Pretoria.

The closing date for comments is 05 May 2023.

For further information or any queries, please contact Moefi Moroeng, Phone 012 401-4633, Fax 012 401-4700