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Electricity Regulation Act, 2006 (Act No. 4 of 2006)


Integrated Resource Plan 2019

2. The IRP in Context

2.7 Municipalities and related issues


2.7.1 Access


South Africa still has 3-million households without access to grid-based electricity. Electrification through non-grid connections has been effective in providing lighting and small power, but it is inappropriate for providing thermal energy for cooking and space heating. A significant thermal energy load still needs to be provided for, by providing solutions side by side by with off-grid technologies, particularly in those areas that are too remote to build grid-based infrastructure. Electricity is not efficient carrier for meeting the thermal load related to cooking, space and water heating.


The cost of providing a grid connection has increased as the areas being serviced become more remote. There is therefore a need to quantify the off-grid and micro-grid opportunity and put in place the necessary frameworks for accelerated development.


2.7.2 Non-Technical Losses and financial viability


Most municipalities struggle to keep up with the payment for bulk electricity purchases from Eskom, and as at March 2018 Eskom’s Chairman indicated that the debt burden stood at over R13.5 billion and continued to rise. The fiscal framework for some municipalities (particularly the rural ones) is unviable, posing a serious risk to their financial sustainability.


The non-payment of electricity, including the theft of distribution infrastructure (copper and cables) and poor credit control systems, needs urgent attention. The Department of Co-operative Government and Traditional Affairs leads an initiative to support municipalities to turn this around.


2.7.3 Distributed Generation and Smart Grids


Distributed generation through biomass, biogas and municipal waste are areas holding great potential for improving municipal revenues. All municipalities have sites for processing waste; they also have sewer outfall sites. Technologies are available for these resources to be added to the generation mix at sub-utility scale. Most small scale generation technologies have low capacity factors, meaning that typically the power is not generated throughout the day and night. For a balanced and safe interconnected power system to be operated sustainably, the intermittent power generators have to be integrated and controlled through smart technologies.


The IRP already makes provision for distributed generation. This is intended to allow for power generation embedded within municipal distribution networks and therefore diversify their supply base.