Announcement by President Cyril Ramaphosa on amendment to schedule two of the electricity regulation act

Good afternoon,

We are holding this briefing today in a time of great hope and great difficulty.
Difficulty, because we are in the midst of the worst economic crisis in our country’s recent history, which has seen a dramatic increase in unemployment and hunger and a significant decline in economic growth.

Hope, because we are already starting to see the results of our efforts to recover and to rebuild.
In the GDP figures released by Statistics South Africa this week, in the encouraging signs of a revival in many sectors of our economy, and in rising business confidence, we are seeing the green shoots that emerge after a devastating fire.

We are witnessing, as I predicted in the State of the Nation Address only a few months ago, the rebirth of our resilient protea. The economic impact of the coronavirus pandemic has been severe, not only for South Africa, but for the global economy.

As a country, however, our challenges predate the pandemic. We have experienced low economic growth and high levels of unemployment for many years, due to the structural constraints that hold our economy back.

There is no doubt that the prospect of a continued energy shortfall and further load shedding presents a massive risk to our economy. That is why we have identified the achievement of energy security as one of the priority interventions in our Economic Reconstruction and Recovery Plan.
Our ability to address the energy crisis swiftly and comprehensively will determine the pace of our economic recovery. Resolving the energy supply shortfall and reducing the risk of load shedding is our single most important objective in reviving economic growth.

In the past weeks and months, we have made some important progress in addressing the energy crisis under the leadership of the Minister of Mineral Resources and Energy.

This includes the announcement of 11 successful bidders for the Risk Mitigation Power Procurement Programme and the opening of Bid Window 5 of the renewable energy programme to procure 2 600 MW of new generation capacity from wind and solar PV projects. Eskom is working hard to improve the performance of its existing fleet of power stations, reduce its debt burden and complete its restructuring process.

While these steps are positive and necessary, they are not enough to address the immediate and significant energy shortfall that threatens our economic recovery.

We know that to confront the energy challenge will require bold and urgent action now.
Incremental measures will not be sufficient to meet the scale of this challenge.

We also know that in responding to any crisis, we must remain agile and willing to adapt our interventions to match the circumstances that we face. The interventions that we planned yesterday may not be sufficient to meet our needs today. For this reason, we are today announcing a significant new step in further reforming our electricity sector towards achieving a stable and secure supply of energy.

Following an extensive public consultation process and a significant amount of technical work undertaken by the Department of Mineral Resources and Energy, we will be amending Schedule 2 of the Electricity Regulation Act to increase the NERSA licensing threshold for embedded generation projects from 1 MW to 100 MW.

This intervention reflects our determination to take the necessary action to achieve energy security and reduce the impact of load shedding on businesses and households across the country.
It is evidence of our intention to tackle this economic crisis head-on, by implementing major economic reforms that will transform our economy.

It also demonstrates our commitment as government to listen carefully to experts, to engage closely with our social partners, and to take on board new ideas to address our longstanding challenges. This measure will be crucial in developing a response to the energy crisis that is ambitious enough, bold enough and urgent enough.

I thank you.