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Ramaphosa’s big energy announcement explained

Tired of all the loadshedding? So are SA’s corporates. Until today, a company could only create 1MW of energy and relied on Eskom for the rest. As you can imagine, that “rest” is QUITE a lot and Eskom isn’t exactly handling it. In a big announcement today, President Cyril Ramaphosa said government is raising the 1MW limit to a whopping 100MW, with an amendment to the Electricity Act. He effectively overruled Gwede Mantashe, mineral resources and energy minister, who previously insisted on a threshold of just 10MW.

To explain: a firm can only generate its own supply of electricity up to a certain amount, a topic of huge debate. Self-generation is by far the quickest way to bring additional megawatts onto the grid and lobby groups have been hard at work to increase that threshold, as that really could be the magic bullet to help the country’s energy crisis.  

Today’s announcement is more than even lobbyists had hoped for. Organised business and the Minerals Council SA, as well as Eskom CEO André de Ruyter, recommended that the threshold be set at 50MW.  

A mine would require at least 40MW of power, as Business Day has previously pointed out. Bigger enterprises, which are more likely to have the cash to invest in self generation, would need even more. 

Here are some of the implications: 

  • It takes the pressure off Eskom. All that loadshedding we’ve been hit with recently is because our national electricity system is like a car that’s been driven hard for ten years and never serviced. It’s falling apart and needs to be fixed. 
  • Companies can plan for their future more effectively, and are more likely to invest and spend their cash reserves, knowing they can guarantee their own energy supply. The private sector often holds back because of uncertainty on this and other issues, which hampers the entire economy. This move could lead to more growth, money circulating in the economy, and jobs. 
  • Companies can sell their extra electricity to the national grid and metros could buy it, meaning potentially more reliable electricity for you and me. The shift basically opens up a freer market when it comes to electricity, instead of forcing everyone to use Eskom, which can’t handle all the demand anyway. 
  • It will unlock significant investment in the energy generation sector. Think: solar and other renewable energy companies getting more work, and creating jobs. 

Clean energy AND more jobs? We’re here for it. Well done on the bold and decisive action, Cyril. More of this, please!

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