Mayor Geordin Hill-Lewis has announced the City can now pay cash for power fed into the local electricity grid. Businesses, and in time, residents, will receive cash for selling their excess power into Cape Town’s grid.
If you were thinking of investing in solar power, the prospect just got more attractive.
This was after the National Treasury exempted the City from competitive bidding processes not designed for the coming energy revolution. The sale of excess power by homes and businesses with Small Scale Embedded Generation (SSEG), among other generation solutions, will contribute to Cape Town’s goal of 4-stage load-shedding protection within three years.
“The future is now, as we aim to immediately roll out the paying of cash for power. Payments to commercial customers will be possible before June and within the year for any Capetonian with the necessary City-approved generation capacity,” said the mayor.
He continued by saying that they hoped to purchase electricity from as many customers of the City as would sell it to them. These clients are now permitted to generate as much electricity as they can from their approved systems and feed it into the grid in Cape Town.
In accordance with this plan, the City will also give these customers a reward in addition to the NERSA-approved tariff in exchange for their assistance in reducing loadshedding.
“As our network of home power producers grows, so will our city’s energy security. This has the potential to be a powerful force to end loadshedding over time, together with our independent power procurement programme and Power Heroes incentives for voluntary energy savings,” said Mayor Hill-Lewis.
The National Energy Regulator of South Africa (NERSA) has approved a rate of 78.98 cents per kilowatt-hour for this financial year for the City to pay power sellers. The City also adds a 25-cent per kilowatt-hour incentive tariff on top of this.
Cape Town is focused on ending loadshedding over time, and it has steadily been laying the groundwork to enable payment for excess small-scale power, including:
- Getting rid of a policy that said power sellers had to be “net consumers” of energy. Before, excess power could only be credited to municipal bills instead of being paid for in cash.
- By starting a wheeling trial for commercial and industrial users, technical and billing problems can be worked out before a large-scale rollout.
- Putting aside R15 million to pay for small-scale embedded generators’ energy for the rest of this fiscal year, which ends in June.
SSEG and wheeling customers who want to feed energy into the grid need to have their systems approved and have an AMI (Advanced Metering Infrastructure) metre installed by the City that allows accurate reporting of the amounts of energy consumed and generated.
The City recognises that this metre is still too costly for many, and we are working on finding an alternative, City-approved option of comparable quality and reliability.
At the City’s request, the National Treasury granted Cape Town an exemption from competitive bidding and tendering processes that may otherwise apply to this process under Section 3 of the Preferential Public Procurement Framework Act (PPPFA).
The exemption is needed because South Africa’s law on public finances doesn’t allow for buying energy from companies other than Eskom.
The result is an insurmountable administrative burden not suited to the dynamic, decentralised process of buying and selling electricity that is wheeled into the grid by a great number of small-scale generators, all of whom are being paid at the same price.
The requirement of a “competitive bidder” or “single winner” for goods and services would make the wheeling programme a non-starter.
Aside from the competitive bidding exemption, the City’s power purchases will be fair, equitable, transparent, and cost-effective in compliance with Section 217 of the Constitution.
Furthermore, the City does not intend to enter into additional contracts with feed-in customers and is instead finalising a pro forma standard agreement.