City of Cape Town launches small scale embedded energy generation guidelines and tariff

Submitted by: Amanda Botes, Monday, September 29, 2014

<p>The City of Cape Town has signed its first two contracts with small scale embedded commercial generator, Black River Park. (Image Source: Jonathan Ramayia)</p>

The City of Cape Town has signed its first two contracts with small scale embedded commercial generator, Black River Park. (Image Source: Jonathan Ramayia)

The City of Cape Town has launched a set of guidelines and associated tariffs for small scale embedded energy generators with a generation capacity of less than 1MVA. Guidelines and tariffs have been compiled for commercial, industrial, and residential generators and are applicable for both renewable energy generation and co-generation. Small scale generators will be permitted to connect to the grid and in so doing be able to both import energy from and export a limited amount of energy onto the City’s grid, which they will be credited for.

Net consumers
Brian Jones Head of Green Energy at the City of Cape Town explains that the tariffs are only for small scale generators that are net consumers, i.e. they consume more from the grid than they put back onto the grid. “We are not looking for customers to generate more than they consume on average over the year, they must have purchased more over the year. We will be assisting net consumers, not net generators,” explains Jones. Consumers on the small scale embedded energy (SSEG) tariff will also not be permitted to sell or supply energy on to another user. The energy has to be consumed on site or exported onto the City of Cape Town’s grid. 

Requirements and application process

Only generators with a generation capacity of below 1MVA will be considered for the SSEG tariff. Evidence of a generation license will not need to be produced for connections of up to 1MVA. However, Jones adds that they will advise the National Energy Regulator of South Africa (NERSA) of all generators connected to the grid and it will then be up to the regulator to indicate if a generation license is required. Any small scale generator that wants to connect to Cape Town’s grid is required to complete a detailed application form and gain written approval from the City of Cape Town before connecting to the grid. The approval process includes getting permission from different City Departments, testing of the installation and ensuring that the equipment aligns with technical standards (The details of this process can be found in the Guidelines for Embedded Generation document). The guideline document separates consumers into residential, and commercial and industrial users.

Residential customers

Residential customers that want to be compensated for energy that they place on the grid will be required to move to the SSEG tariff structure and to have an industrial bi-directional AMI credit meter installed. The purchase and installation of this meter will be done by the City and will be for the generator’s account. The Residential small-scale embedded generation tariff comprises of the following charges which will be updated annually:

  • A daily service charge of R13.03 for the use of the grid.
  • An electricity consumption charge per kWh consumed. This is currently 109.17c per kWh.
  • The rate per kWh at which the City will purchase excess generation. This is currently 49.72c per kWh and is exclusive of VAT. The City of Cape Town will credit the consumer’s electricity account in Rands (not kWh’s).

Residential generators that want to connect to the grid but do not wish to be compensated for energy placed on the grid can remain on their existing tariff structure but will be required to install a device which blocks reverse power flow. The City of Cape Town indicates that it will not permit existing meters to run backwards. 

Commercial and industrial customers

Like their residential counterparts, commercial and industrial customers that want to connect to the grid and feed energy back on to the grid will be required to install an industrial bi-directional AMI credit metre, which will be for the customer’s account. Again, commercial and industrial generators that want to connect to the grid but don’t want to be compensated for energy that they place on the grid will be required to install a device which blocks reverse power flow. Commercial and industrial prepayment customers will be required to be on a tariff that has a daily service charge and they will be credited at the same rate that residential consumers will be credited, explains Jones. The energy credit tariff is based on an estimation of what the City would have on average paid Eskom for the energy. VAT will only be paid out to registered VAT vendors.

The first contract signed

The City of Cape Town signed its first two contracts with small scale embedded commercial generator, Black River Park on the 23rd of September 2014. Black River Park is an office park spanning two separate erven that has installed two independent solar PV plants on its rooftops (950kWp and 252kWp) which generate electricity for its office use. Black River Park will now be able to export energy that it does not use onto the City of Cape Town’s grid and be credited for this.

Documents available online

The guideline document, application form, and contract for both residential, and commercial and industrial users, is available on the City of Cape Town website for downloading.

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Amanda Botes