South Africa to Pay for Reduced Electricity Demand, Bringing in 3,800MW to the National Grid

During a press conference on the Energy Action Plan, South Africa’s Minister of Electricity, Kgosientsho Ramokgopa, announced that the government aims to increase the country’s generation capacity by 3,800MW, with 400MW set to come online by the end of May 2023. The minister also revealed that households and companies will receive incentives for reducing their electricity demands.

According to Ramokgopa, demand-side interventions are going to be a major focal point since household initiatives are cheaper and faster to implement for reducing demand. The Distribution Demand Management program provides a financial incentive for commercial and residential customers who reduce their demand for electricity. The scheme aims to ensure that during specified periods of peak demand electricity shortages, South Africa can attain the required demand reduction, with a financial incentive of R3 million per megawatt saved through reducing electricity demand.

The objective of these incentives is to either avoid rotating blackouts or rolling power cuts altogether, allowing for a more balanced supply-and-demand strategy to be met. By reducing peak demand through these incentives, the grid will have a better chance of meeting the supply side of the equation. The objectives of implementing these interventions are to provide a unique opportunity for the electricity supply network to manage the demand risks that are associated with it.

The minister ensured the public that the incentives would be granted based on a specific relative reduction in energy usage, verified against a baseline. For all participants, an independent measurement against that baseline will be conducted, ensuring that there is no abuse to the system.

Ramokgopa remarked that the National Energy Regulator of South Africa would hold public hearings regarding three of the National Energy Crisis Committee’s initiatives on the 19th of May. The initiatives discussed were the reduction of load-shedding, cross-border power purchases, and emergency generation programs. Once the regulator gives its approval, these initiatives should be able to provide South Africa with 3,800MW of new generating capacity.

The Standard Offer program will supply an additional 400MW of generation capacity; contracting for this capacity has already been concluded and will be available online by the end of May. This initiative, along with others, will help provide South Africa with the electrical stability it needs during times of peak demand.

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