Private Power Breakthrough: Nersa Clears the Way for More Renewable Energy in South Africa

South Africa has taken a major step toward a more sustainable and reliable energy future. The National Energy Regulator of South Africa (Nersa) has officially approved congestion curtailment as a constrained generation ancillary service. This move opens up much-needed grid capacity for private power producers — especially in the wind- and sun-rich regions of the Eastern and Western Cape.

The approval, granted to the National Transmission Company South Africa (NTCSA), was announced during Nersa’s meeting on April 29, 2025, and takes effect retroactively from April 1, 2025, until March 31, 2028.

What Is Congestion Curtailment?

Congestion curtailment refers to temporarily restricting the amount of power a generator can feed into the grid due to bottlenecks or system constraints. While it may sound like a limitation, in practice, it helps optimize grid performance by managing where and when energy is added.

In this case, it’s a strategic tool that will unlock new capacity on the grid, enabling more private sector wind and solar projects to connect in high-potential areas without waiting for full-scale grid upgrades.

Nersa called the decision a “significant step” that will improve energy availability while still protecting consumers from excessive costs. The regulator emphasized that all financial implications will be tightly controlled and subject to periodic reviews.

Safeguards and Reporting

The approval includes several key conditions:

• Curtailment limits are bound by the revenue outlined in the Sixth Multi-Year Price Determination (MYPD6).

• Only projects in the Eastern and Western Cape will initially benefit.

• NTCSA must report to Nersa every six months, detailing capacity added, curtailment events, costs, and project progress.

• Any compensation to affected generators will be capped according to MYPD6 provisions.

By enforcing these conditions, Nersa aims to balance grid development with cost-efficiency and fairness.

Unlocking Private Investment in the Grid

Private energy developers have long been hampered by a lack of transmission capacity. While many Independent Power Producer (IPP) projects are ready to go, limited infrastructure has made it difficult to bring that power to market.

That could soon change.

In a budget review earlier this year, the South African government revealed plans to allow private sector involvement in transmission expansion. A dedicated Independent Transmission Project is expected to launch in 2025, with a request for proposals planned for November.

Can Eskom Keep Up?

Eskom has a 10-year plan to expand South Africa’s transmission lines by 14,000km — but progress has been sluggish. As of late 2024, experts estimated the utility was only adding about 300km of lines per year, well below the 2,500km/year target needed to stay on track.

Peter Attard Montalto, Managing Director at research advisory firm Krutham, has repeatedly emphasized that private-sector participation will be critical.

“We’re going to need new models. We’re going to need the private sector doing independent transmission power projects,” Montalto said. “That’s how you roll out grids very quickly.”

A Turning Point for South Africa’s Energy Market

With Nersa’s new approval and looming private investment opportunities, South Africa may finally be turning the corner in its battle to secure reliable, affordable, and renewable power.

The combination of regulatory reform, private investment, and targeted grid expansion could unlock thousands of megawatts of clean energy, reduce load shedding, and stimulate economic growth — particularly in regions rich in wind and solar potential.

This is the kind of good news the country’s energy market and its people have been waiting for.

{Source: My Broad Band}

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