A new South African private electricity trading company has recently being awarded a landmark licence that allows it to transport energy from independent power producers (IPPs) to private end-users in any location across the municipal and national electricity grid.
Awarded in February 2022, Enpower Trading is the second private electricity trading company in South Africa to be granted a trading license by the National Energy Regulator of South Africa (Nersa), and the first to be awarded such a licence in over 12 years.
The license enables Enpower Trading to source competitively-priced, predominantly renewable power from multiple IPPs and small-scale generators, transport or ‘wheel’ this energy across the national and municipal grid networks, and sell it to customers at a discount to prevailing electricity tariffs.
Nersa’s awarding of this licence represents a critical step forward in the Department of Energy’s roadmap, which plans for the unbundling of Eskom’s generation, transmission and distribution business units to enable the transition from a single-buyer model to a more competitive domestic open market model.
An August 2021 amendment to the Electricity Regulation Act exempts embedded electricity generation projects between 1 MW and 100 MW from the previous requirement of applying for a generation licence, requiring them only to register with Nersa.
This regulatory relaxation is expected to drive an increase in the number of South African IPPs and small-scale embedded generators (SSEGs) and consequently, the availability of independently-produced renewable energy.
Customers who sign a PPA agreement with Enpower Trading will receive a lower tariff than the prevailing electricity tariffs and are also subject to lower annual tariff increases.
Having already inked two UoSAs with Western Cape municipalities in George and Overstrand, Enpower Trading now seeks to replicate its business model in other South African municipalities.
