Eskom issues new rules for grid access

Eskom is doing away with its "first come, first served" principle for projects applying for grid access. It now wants developers to demonstrate that their projects are shovel-ready and will be able to add generation capacity before making grid allocations.

Speaking at a briefing to industry players on Tuesday, Eskom's general manager for operations enablement, Velaphi Ntuli, said the changes had come about given grid constraints that are escalating with each public power procurement process and now the opening up of the energy market for Independent Power Producers (IPPs).

Ntuli explained that Eskom wants to ensure that projects that are "shovel-ready" are the ones that get connected first, rather than the current situation, where projects that applied first for grid capacity get allocations and then effectively hog space indefinitely.

"We can't continue to have a situation where capacity is allocated and capacity is not used. We need to work together to ensure we have these minimum things in place so that guaranteed generation capacity is added to the grid," he said.

Urgent needs

Last year, 23 wind projects lost out on being named preferred bidders in round six of the Renewable Energy Independent Power Procurement Programme (REIPPPP) owing to grid constraints. As government prepares to launch Bid Window 7, the interim rules are warranted given the urgent need for grid capacity, said Seetsele Seetswane, engineering manager at Eskom.

Issues with the emergency procurement projects hogging space had caused delays for Bid Window 5 of the REIPPPP and, consequently, Bid Window 6.

"As we now get ready for Bid Window 7, the problem is getting worse. That is why we developed the rules," he added.

One of the other complications is the opening up of the energy market to more private generators, with government scrapping the licensing threshold for private projects. "This led to an influx of applications and stiff competition," said Seetswane.

The rules have an "interim" status until Nersa finalises them.

The rules do not prioritise any projects (whether private or public) over the other, nor any generation technologies.

He explained: "We hope that the rules will help us achieve a fair and equitable and transparent allocation for the limited resource that we have."

Be ready

Eskom has a project-readiness criteria that developers will have to meet.

Notably, the applicants must provide a guarantee to Eskom from a financial institution approved by the power utility. The details of the guarantee are being finalised and will be shared soon.

Seetswane said that if a project does not follow through and meet the set timelines, then their grid allocation will be revoked.

The interim rules are a short-term solution, said Seetswane. In the long term, Eskom will ultimately expand grid infrastructure to connect more projects.

Concerns addressed

But some industry stakeholders raised concerns that the new requirements would require developers to spend a lot of money to be able to demonstrate they meet the requirements without a guarantee they would have grid access.

Ntuli said that Eskom does not take the levels of investment required by developers or the challenges they face lightly. He said there must be a balance between the upfront investment IPPs make and the need for Eskom to make allocations that actually yield power.

He also noted concerns about existing projects that have grid allocations but are not using them. Ntuli said Eskom is working with the IPP Office to resolve this. If the projects cannot progress and feed megawatts to the grid, then a decision must be made on their grid allocation, he said.

Ntuli said Eskom is open to feedback on the new rules and is willing to work with industry.

- NEWS24