South Africa approves 200 MW of PV under new distributed-generation rules

Cape Town-based renewables developer Sola Group has secured approval from the National Energy Regulator of South Africa (Nersa) to build two 100 MW solar power plants.

The two projects will be located in South Africa’s North West province. They will sell electricity through power purchase agreements (PPAs) to US-based titanium products supplier Tronox, which operates several mines and smelters in the region.

“The significance of this first move is that it will pave the way for many more large scale private projects to receive approvals to be able to contribute to generation capacity to the grid,” said Sola Group CEO Dom Wills. “This is a clear signal to the market that private power is achievable and there are private funders that are excited to finance this market.”

The South African government raised the threshold for the distributed-generation solar segment to 100 MW in August 2021, exempting developers from applying for generation licenses to improve the entire permitting process. The new rules also imposed a wheeling fee to be paid to national state-owned utility Eskom for the maintenance and upkeep of its infrastructure to transport the energy.

“Under this mechanism, the energy can be produced by an IPP in one Eskom connected area, and sold to their client in other Eskom connected areas,” said Sola Group.

The company expects to achieve financial close on the two projects in July. It plans to finalize their construction within 14 months.

“The advantage of the wheeling framework is that it allows perfect solar regions to be developed and used to provide power to perfect industrial and mining regions” said Wills. “A perfect solar region is a flat area, with high solar resource, very little environmental or social impact, uncomplicated underground conditions and has access to a strong grid node with good power evacuation potential.”