Cape Town announces cash for power system

[Nat Quinn]

Cape Town Mayor Geordin Hill-Lewis has announced the city can now pay cash for power fed into the local electricity grid.

The system will launch to businesses and become available to Cape Town residents in time. Participants will receive cash for selling their excess power into Cape Town’s grid.

This comes after National Treasury exempted Cape Town from competitive bidding processes, which the city said was not designed for “the coming energy revolution.”

Cape Town aims to give residents four stages of load-shedding protection within three years.

The sale of excess power by homes and businesses with small-scale embedded generation, among other generation systems, will contribute to this goal.

“Payments to commercial customers will be possible before June, and within the year for any Capetonian with the necessary City-approved generation capacity,” Hill-Lewis said.

“If you’re thinking of investing in a solar system, it just got more attractive.”

He said it aims to buy electricity from as many city-supplied customers as are willing to sell.

“These customers may now produce as much power as they can from their approved systems and feed it into Cape Town’s grid,” stated Hill-Lewis.

“Under this plan, we will also pay these customers an incentive over and above the Nersa-approved tariff as they help us turn the corner on load-shedding.”

The National Energy Regulator of South Africa (Nersa) has approved a rate of 78.98c/kWh for this financial year.

Cape Town will add a 25c/kWh incentive tariff on top of this.

Hill-Lewis said the city has steadily laid the groundwork to enable payment for excess small-scale power, including a wheeling trial for commercial and industrial users.

The trial is helping to iron out technical and billing issues ahead of mass-scale rollout.

Small-scale embedded generation and wheeling customers who want to feed energy into the grid need to have their system approved and have an AMI (Advanced Metering Infrastructure) meter installed by the city.

“This is a bi-directional meter that allows accurate reporting of the amounts of energy consumed and generated,” the city said.

“We know this meter is still too costly for many, and we are working on finding an alternative option of comparable quality and reliability.”

Customers who want to upgrade their systems must have it approved by the city.

Treasury exemption

Hill-Lewis explained that Treasury granted Cape Town an exemption from competitive bidding and tendering requirements that may otherwise apply to this process using section 3 of the Preferential Public Procurement Framework Act (PPPFA).

“The exemption is necessary because South Africa’s Public finance legislation did not foresee energy procurement from independent power producers, only from Eskom,” he said.

“The result is an insurmountable admin 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 (and at a cost that is cheaper than Eskom).”

Hill-Lewis said the requirement of a “competitive bidder / single winner for goods and services” would make the wheeling programme a non-starter.

“Aside from competitive bidding exemption, the City’s power purchases will be fair, equitable, transparent and cost-effective in compliance with section 217 of the Constitution,” Hill-Lewis stated.

“The City furthermore does not envisage entering into further contracts with feed-in customers, and is instead finalising a pro forma standard agreement.”

 

Cape Town announces cash for power system (mybroadband.co.za)

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