Nersa committee recommends licensing of four more traders, batting away Eskom objections

The electricity subcommittee of the National Energy Regulator of South Africa (Nersa) has recommended the approval of four more electricity trading licences, dismissing the objections raised by Eskom’s distribution division during hearings in July.

The recommendation that GreenCo Power Services, Discovery Green, Green Electron Market and CBI Electric Apollo receive national trading licences will now be taken to the Energy Regulator, Nersa’s highest decision-making body, for approval.

Eskom shocked the market on July 18 when it argued that, under the current rules, Nersa was prohibited from allowing two or more licensees to supply the same area.

Eskom also accused the traders of “cherry picking customers” and warned that granting the licences would also compromise the sustainable and orderly development of electricity supply infrastructure.

The objection was lodged despite the fact that Nersa had already issued six trading licences since 2014 to PowerX, EnPower Trading, Neura Trading, Energy Exchange of Southern Africa, Envusa Trading and even to Eskom Holdings’ National Transmission Company South Africa.

In recommending that the four new licences be approved, Nersa members argued that the limitation to no more than two licensees related to a distribution licence, which involved the building of physical networks and operations.

There was no such limit on trading licences, where traders relied on those networks and operations to buy and sell electricity and paid to use them.

Traders would be expected to pay the licensed distributor, including Eskom or municipal distributers, to wheel electricity through the networks and there was, thus, no potential for infrastructure conflicts or safety concerns, Nersa concluded.

Regarding cherry picking, Nersa stressed that it could not control which customers and generators traders entered into agreement with, and again underlined that the licensed distributor was entitled to received revenue for the use of its network.

The subcommittee members also noted that Nersa was obliged through both direct legislation and South Africa’s competition legislation to ensure non-discriminatory access to distribution grids.

It was also noted that Eskom had been delaying the issuance of grid connection budget quotes to generators that had entered into bilateral contracts with traders that had not yet received a licence.

The development highlighted the need for a national wheeling framework, which Nersa intended to finalise before the end of the year.

GreenCo Power Services’ application for an import and export licence was not considered by the subcommittee, however, but a commitment was made to adjudicate the matter in the not-too-distant future.

During the meeting, Eskom’s application for a generation operating licence for solar PV projects at the Lethabo power station site, in the Free State, and the Sere wind farm site, in the Northern Cape were also recommended for approval, as was AGV Projects’ application to operate battery energy storage systems.

Meanwhile approval was given for the registration of the Lion Thorn distribution facility, in North West province, given that distribution facilities were not covered by the generation licensing exemption of 2023.