South Africa’s government will allow private investors and companies to build their own power plants with up to 100 megawatts of generating capacity without a license, up from a previous limit of 1 megawatt.
The move should help ease energy shortages that have hobbled Africa’s most-industrialized economy since 2005. The country is currently being subjected to rolling blackouts, with state utility Eskom Holdings SOC Ltd. unable to generate sufficient electricity from its old and poorly maintained plants to meet demand.
“There is no doubt that the prospect of a continued energy shortfall and further load-shedding presents a massive risk to our economy,” President Cyril Ramaphosa said Thursday in an online briefing. “This intervention reflects our determination to take the necessary action to achieve energy security.”
Generation projects will still require permits to connect to the grid, but they will be much quicker to obtain than licenses, according to the president. Companies producing excess power will be able to sell it through the transmission network, subject to agreements with Eskom and municipal authorities, he said.
Power-intensive industries have been lobbying for the cap to be raised. Mineral Resources and Energy Minister Gwede Mantashe previously proposed that it be lifted to 10 megawatts. The first generation permits should be issued within three months, he said.
The aggregate effect of Ramaphosa’s announcement will be “massive” for South Africa’s economy, Investec Bank Ltd. said in a research note.
Mining companies have a pipeline of energy projects totaling about 1,500 megawatts that could be brought on stream within nine to 36 months, the Minerals Council South Africa, a lobby group for the industry, said last year.