Cape Town to start paying cash for excess electricity fed into the local grid

Cape Town businesses capable of feeding electricity into the local grid will be paid cash for their excess power before the end of June and homeowners within the year.

Mayor Geordin Hill-Lewis announced timelines for the groundbreaking initiative, among other energy generation solutions, on Tuesday that would contribute towards the city’s goal of attaining protection against four stages of load-shedding within three years.

“The future is now, as we aim to immediately rollout 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. If you’re thinking of investing in a solar system, it just got more attractive,” said Hill-Lewis.

“We aim to buy electricity from as many city supplied customers as are willing to sell to us. These customers may now produce as much power as they can from their approved systems and feed it into Cape Town’s grid. Under this plan, we will pay customers an incentive above the Nersa-approved tariff as they help us turn the corner on load-shedding.”

TimesLIVE reported six months ago that the city was gearing up to pay cash for excess energy fed into the grid.

The scheme was made possible after the National Treasury exempted the city from competitive bidding processes “not designed for the coming energy revolution” and the National Energy Regulator of South Africa (Nersa) approved a rate of 78.98c/kWh for this financial year for the city to pay power sellers. The city will add a 25c/kWh incentive tariff on top of this.

Hill-Lewis said the city had been steadily been laying the groundwork to enable payment for excess small scale power, including:

• dropping a policy requirement for power sellers to be “net consumers” of energy, which previously only allowed for municipal bills to be credited for excess power instead of cash payments;
• starting a wheeling trial for commercial and industrial users to iron out technical and billing issues ahead of mass rollout; and
• allocating a R15m budget to pay for energy generated by small-scale embedded generators until June.

Small-scale embedded generation and wheeling customers wanting to feed energy into the grid must have their system approved and have an advanced metering infrastructure (AMI) meter installed by the city.

“This is a bidirectional meter that allows accurate reporting of the amounts of energy consumed and generated. We know this meter is still costly for many, and we are working on finding an alternative option of comparable quality and reliability. Customers who want to upgrade their systems to make use of this existing development need to have the upgrade approved by the city.”

“At our request, National Treasury granted Cape Town an exemption from competitive bidding/tendering processes that may otherwise apply to this process using section 3 of the Preferential Procurement [Policy] Framework Act,” the city said.

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

“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 being paid at the same price (and that is cheaper than Eskom).

“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.

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

TimesLIVE

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