Nersa switches on its positive energy
Nhlanhla Gumede, who is in charge of electricity regulation for the National Energy Regulator of SA, says Nersa will cut through red tape to make it as quick and easy as possible for private entities wanting to generate and sell their own electricity in terms of recent government reforms."It's a commitment we've made. We understand that it is an imperative and have been working on how to do just that," he says.The reforms allow unlicensed self-generation of up to 100MW. But registering with Nersa is still a necessity, and the industry has expressed concern that this will lead to delays.Gumede concedes that Nersa's record is far from encouraging, with stories of licence applicants having to wait anything from four months to well over a year.He says this is because applications have been manual and paper-based."We've recognised that we need to move into the 21st century and make these applications online."But it's not going to happen overnight, he admits."Unfortunately, all IT projects do take time. Part of it is how we re-engineer processes even before we put IT systems in place. But we've started."Gumede, a metallurgical engineer and MBA from Wits University who was an adviser to international oil companies on regulatory frameworks, energy policy and strategy before being recruited by Nersa last year to jack up its performance, says some of its processes are still "archaic". Is this why new private power projects have faced such lengthy and in some cases financially crippling delays before getting approval?The "biggest issue" for independent power producers has been access to markets, he says. They've had to sell to Eskom, which was a single buyer."If you're selling power to a state-owned entity, that is seen as public procurement and needs to follow particular procurement processes."Can he allay the fears of industry players that wherever Nersa is involved there will be bottlenecks?The problem for private energy producers is that Nersa has always seen itself as "controlling" entry into the industry, he says."We are repositioning ourselves very differently. We are now seeing ourselves as facilitating entry."It's a fundamental change of mindset, he says. The Nersa way has been that if someone applies and they don't have all the information that is required, they're told to come back when they've got it.But the law says Nersa must engage with people before they make an application, he says."We are supposed to engage with the applicants to indicate exactly what information they will require. And assist them to get that information so that when they come to apply they're not going to be short of any information."This is what Nersa should have been doing but has not."The law implores us to do certain things, but we have not always done those things."It's a mentality that says: "We're not going to pass everybody, only the strongest." The mind shift it is encouraging among staff now is: "You are not there to fail people, you are there to make people pass." Part of this mindset change is the acknowledgement that "we do need to move into an IT-based system so that people can apply online, so that if there's any information or documentation they need, they can upload it online."Unfortunately, it might take a bit of time for us to get there."They're not "looking for a Rolls-Royce", he says. Just certain front-end things that can be done quickly using tried-and-tested systems. A lot of the time staff haven't logged basic data. He hears that an entity has been trying for three years to get an application approved but he as the regulator has never even seen the application.Interactions between Nersa and applicants are not recorded."We need to have a record so that when someone says, "I first engaged with Nersa in December last year," there is a log of that."Even just that on its own is going to facilitate a change in mindset."Why has it taken Nersa so long to wake up to something so obvious?"The industry is changing. We've always been regulating Eskom, and everything has been going through Eskom. Now that luxury is gone. Even Eskom itself is breaking up."Independent power producers who have been obliged to sell to Eskom are now wanting to sell directly to other customers."So the landscape is changing and it's changing very fast."As a regulator, Nersa has been "complacent", he says. It needs to change that mindset fast or risk becoming irrelevant."Our survival is dependent on us delivering the service for which we were created. If we are seen only as a bottleneck and we are not adding value, then clearly we should not be there."He admits that opening up the market to private generators who no longer need a licence is forcing Nersa to answer the question: what value does Nersa in fact add?"Clearly, there is value in respect of some level of co-ordination. But if that co-ordination is inhibiting growth then the industry may well just grow unco-ordinated, with all of the challenges that may come with that."He obviously believes Nersa can add value, while agreeing that it has not added as much as it should have.Self-generating entities wanting to sell to municipalities could bear the cost.Though Nersa has licensed these municipalities to operate grids, they have not monitored them to ensure compliance with the licence conditions.As a result, many, if not most, of these grids have not been properly maintained and are "pretty dicey" in terms of their stability, he says."On paper they may say yes, you can connect. But in reality the private investor may still have to do something to ensure the stability of that grid."This could cause "considerable delay". Nersa is now asking: "How do we ensure compliance with the grid code at municipal level?"Meanwhile, local businesses kneecapped by power cuts will continue to suffer because Nersa didn't do its job?"Whoever wants to connect has every right to approach a court to force Nersa to ensure compliance, because clearly Nersa, being the issuer of that licence, is obliged to ensure that the licensee complies with the conditions of licence," says Gumede."We have to change. For our own survival and for the survival of the industry - and more so for our economic growth as a country."