Municipal Energy Resilience Project launched

Aiming for a more energy secure future in the Western Cape

David Maynier, Western Cape Minister of Finance and Economic Opportunities says; We are pleased to announce the official launch of the three-year Municipal Energy Resilience (MER) Project to assist municipalities to take advantage of the new energy regulations, which may include purchasing energy directly from Independent Power Producers (IPPs), so that we can create a more energy secure future in the Western Cape.

The MER Project will help municipalities across the Western Cape to understand the requirements of the new national energy regulations, and mitigate related risks as well as provide for network and operational capacity requirements for energy project development and procurement in municipalities.

The MER Project is spearheaded by our Green Economy unit at the Department of Economic Development and Tourism, who are working in collaboration with the Department of Local Government and Provincial Treasury to enable the development of energy projects and engage with municipalities on multiple fronts.

The procurement of energy at utility and municipal distribution scale, such as bulk energy purchases from IPPs, under conditions of developing and evolving policies and regulations is a complex and challenging task. Municipalities may not have the policies, plans, resources, funding, or procurement expertise to procure wholesale electricity from sources other than Eskom, specifically IPPs. Neither have all municipalities’ electricity distribution systems been technically evaluated to clarify their readiness to support new electricity generation and energy trading.

And so, the MER Project is structured in the following three phases:

1. Phase 1 involves the identification of potential candidate municipalities and pioneering projects and the development of a roadmap for rolling these out. The work will explore multiple pioneering renewable energy technologies and scales, cost options, scale of investment required, location issues, risks, municipal readiness needs, infrastructure needs, timelines to get capacity onto the grid, transaction and procurement mechanisms and regulatory issues.
2. Phase 2 will focus on starting the implementation of the pioneering energy projects in the identified candidate municipalities along with working with municipalities to help fill gaps to enable future energy project implementation.
3. Phase 3 will see the development of a master plan for energy projects to be rolled out in municipalities along with the commencement of energy projects in further municipalities as budget allows.

While we recognise that only a few municipalities are likely to be able to procure utility scale energy from IPPs in the near term, there are other energy generation and storage opportunities that may serve to improve municipal energy resilience and future economic growth in the Western Cape.

To support the MER Project, two bids have been advertised in the Government Tender Bulletin on 20 November 2020 and all applicable parties are invited to apply:

• For strategic advisory support – https://etenders.treasury.gov.za/content/department-economic-development-tourism-seeks-appoint-service-provider-extensive-energy
• For project development services – https://etenders.treasury.gov.za/content/department-economic-development-and-tourism-dedat-seeks-appoint-service-provider-extensive

Energy resilience-related work that is already being undertaken by our Green Economy unit and that will continue, includes support to municipalities to develop and revise SSEG feed-in tariff frameworks and feed-in tariffs, engagement with businesses to drive take-up of rooftop solar PV, support to municipalities to enable wheeling on their grid, support to energy sector businesses and the provision of energy technology and cost options to businesses and municipalities, and support to green economy investors in the Western Cape.

Cumulative load shedding in 2020 was 23% worse than in 2019 despite a 9% decrease in real GDP. This is estimated to have cost the country’s economy R500 million per stage per day and the Western Cape’s economy R75 million per stage per day. Recent regulatory changes in the energy sector which we called for, have started to open the door for new renewable energy generation which will allow for an increasingly decentralised system of energy generation and distribution to mitigate the risk of load shedding in South Africa.

And so, we will continue to do everything we can to support municipalities and businesses to participate in the growing green energy sector and to become more energy resilient so that together we can create a more energy secure future in the Western Cape.