SA stakeholders come together to discuss new regulations for power trading

Kimberley Kersten

The National Energy Regulator of South Africa (NERSA) aims to forge a comprehensive regulatory framework that will enable the transition of the South African energy landscape from a vertically integrated system to a dynamic power-trading energy economy.

On June 10 and 11, NERSA hosted a pivotal Power Trading webinar. The online workshop served as a platform for industry stakeholders to engage directly with the regulator, focusing on the increasingly significant role and impact of trading within the regulated industry.

Multiple presenters emphasised the need for a regulatory framework that takes into account the requirements of every stakeholder – from suppliers to end consumers.

This framework needs to promote fair competition among multiple energy providers, said Lerato Kgalema from City Power.“As an established energy provider, we will be facing competition from new entrants in the market. There are certain risks that need to be taken into account, especially regarding the infrastructure, before the energy market can open up to multiple players. Our main constraint is the outdated grid infrastructure. The operational risk lies in the fact that, with more electricity suppliers, the likelihood of disruptions increases.”

It is vital to learn from and collaborate with other countries who have already walked this journey. "The flow of money in a power trading economy will change. Customers will have the ability to choose their suppliers and suppliers will also be able to choose their customers. Therefore, there needs to be an entity to ensure that customers have access to electricity,” said Ted Kury, Public Utility Research Centre Director of Energy Studies in the United States, who offered an international perspective on the discussion.

“Once purchased, electricity can’t be returned so there needs to be amendments to laws for consumers who buy a product that they consume immediately.

“Also, what if a supplier suddenly stops supplying power? The enforcement of rules, needs and the flow of communications determine the success or failure of this type of market,” he said.

Power trading is key to supporting decarbonisation goals through renewable generation sources, said Al’Louise van Deventer of Eskom. However, the primary driver behind transitioning to a more competitive energy economy is the cost of electricity, Van Deventer said.