Gwede Mantashe confusion throws spotlight on SA Govt’s tortured energy strategy

SOUTH Africa’s Department of Mineral Resources & Energy (DMRE) rowed back on comments by minister Gwede Mantashe that it had restricted the threshold for embedded generation to 10MW after conducting a 10,000 person survey.

The department told BusinessLive that such a survey had not been conducted, saying its decision on the embedded energy threshold was based on public comments.

The confusion over the basis for the decision throws the spotlight on Mantashe’s view that South Africa was “not ready” for entities to self-generate more than 10MW when the country’s Minerals Council and André du Ruyter, the CEO of the power utility, Eskom, think it would be a good idea to do exactly that.

BusinessLive said mining companies typically require self-generation of scale in order to make the economics stack up. In order to produce electricity of more than 10MW, miners and other companies must apply to the National Energy Regulator of South Africa (Nersa) for a licence.

Gold Fields recently said it had won a licence to build 40MW capacity solar-powered facilities at its South Deep mine, west of Johannesburg, investing R660m in the process. Mantashe said in his departmental budget speech this week that Gold Fields’ application to Nersa had taken only a year to complete.

“There has been a lot of noise about this but our research and our survey of 10,000 people showed overwhelming support for our move. The majority in the market say they are not ready for 50MW. The issue of debating between 10MW and 50MW is an academic one. The reality is the market is not ready for 50MW,” Mantashe was quoted to have said earlier today.

“The minister’s remark with regards the 10,000 responses refers to comments received by the department in response to the schedule 2 amendment of the Electricity Regulation Act, gazetted on April 23 2021,” the DMRE subsequently stated.

Having to apply for a licence from Nersa is a bureaucratic hurdle when South Africa’s energy problems require a more nimble approach.