Consultations for developing a more competitive South African electricity industry further under way.

On April 19, 2024, the newly formed National Transmission Company of South Africa (NTCSA), with support from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), launched a series of consultative workshops on the proposed wholesale electricity market code for South Africa.

The milestone hybrid event drew 562 attendees, with representatives from National Government, the national electricity utility Eskom, municipalities, industry associations, private sector and academia.

The event comes in the wake of a wave of proposed legislative and regulatory changes, including the Electricity Regulation Act (ERA) Amendment Bill, which was tabled in parliament in August last year. According to South Africa’s Minister for Mineral Resources and Energy, Gwede Mantashe the bill will “radically transform the structure of the electricity sector” for the better. Its purpose, amongst other goals, is to provide for:

An open market platform which will enable competitive electricity trading in South Africa.

Making provisions for the introduction of a Transmission Systems Operator (TSO) to act as a wheeler and dealer of electricity.

Strengthening the role of the National Energy Regulator of South Africa (NERSA) to include the authority to license entities to form a competitive electricity market and have regulatory oversight through the period of transition into said competitive market.

Introduce provisions on penalties and offenses to tackle the vandalism and theft of electricity infrastructure.

In addition, continued efforts to restructure the previously vertically integrated national electricity utility into separate generation, transmission and distribution entities are underway. The unbundling of the Transmission entity in particular, is well advanced with the National Transmission Company of South Africa (NTCSA) expected will be operational in July 2024. It is under the auspices of the nascent market operator function within the NTCSA that development of a market code is taking place.

The South African Wholesale Market Code Launch

A market code creates and supports the trading and settlement rules and procedures for the purchase and sale of electricity by traders, retailers and participating generators. As Dr Peter Tswesigwe, of the Power Futures Lab at the University of Cape Town commented, it “creates a clearly defined and structured mechanism for setting the terms of power trading...in a transparent and unbiased way”.

Given that the introduction of a multimarket will mean a fundamental change to the electricity industry in South Africa, a proposal that is representative of the industry as a whole is vital. Khaya Khaya, of POWERX Pty Ltd, underscored the importance of this process, saying “[For South Africans, the market code means a] decentralized, decarbonized and evolved energy sector with power security”.

Participants from various sectors displayed sentiments favouring the liberalisation process and will keenly track its developments. For De Wet Taljaard from the South African Photovoltaic Industry Association’s (SAPVIA) “the market code will enable competition amongst generators that will result in affordable and reliable renewable electricity for all South Africans”.

In the spirit of transparency, the workshops are open to all for virtual participation and presentations for all sessions will be made available online.

The South African German Energy Programme is proud to support a wide array of South African stakeholders in grappling with the critical questions of reform in the country. In that vein, it will be supporting the NTCSA in its consultative process over the next five months, with discussions focused on the following:

Hybrid Workshop Discussions

For more details regarding follow up activities please contact Dr Ansuya Rungasamy, Senior Technical Advisor for Power Sector Reform, SAGEN (ansuya.rungasamy@giz.de).  

Photo Credit: ©GIZ/Ignus Gerber

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• National Energy Crisis Committee (NECOM’s) Market Code Launch Platform: South African Wholesale Market Code - Eskom