The Energy Regulation and Markets Review - Stikeman Elliott

South Africa
caps) to be used during any energy shortage including penalties for non-compliance with
those measures.
iii Technological developments
The South African National Energy Development Institute (‘SANERI’) is responsible for
energy research and development and devising measures for improving energy efficiency.
It was established in October 2004 64 by the then Minister of Minerals and Energy, as a
subsidiary of CEF (Pty) Ltd, the state energy company in South Africa. The Department
of Science and Technology (DST), together with the Department of Energy, are joint
custodians of SANERI and assist in providing political and strategic focus for the company.
Eskom has started to test hybrid smartgrid models to support its legacy time
multiplexing management system and an internet protocol packet communication
system to improve demand-side management, automatic generation control,
combustion efficiency of its thermal generation fleet and reliability of variable renewable
energy generators. 65 The initial aim of the testing is to establish the compatibility of the
information and communication technology (‘ICT’) architecture used in these models
with Eskom’s existing ICT systems; however, the business case for the full rollout of
the smartgrid migration still has to be developed. Eskom has implemented smartgrid
technology into parts of its 400,000-kilometre distribution network including the
rollout of fibreoptic cabling to most of its larger distribution substations and the use of
general packet radio services at its remote distribution substations.
VI
THE YEAR IN REVIEW
Key developments in the South African energy industry have been focused on the
electricity sector.
As mentioned in Section I, supra, the electricity legislative framework is in a state
of flux and significant reforms are underway to restructure the sector. These proposed
legislative reforms are contained in the ERA Amendment Bill, NERSA Amendment Bill
and the ISMO Bill. The principle features of these reforms are directed at:
a
b
c
d
e
the vertical unbundling of transmission;
the establishment of the ISMO, a 100 per cent state-owned company whose
representative shareholder will be the Minister of Energy, to take over Eskom’s
transmission business, including system operation and dispatch;
the routing of wholesale electricity supply through the ISMO;
the centralised control, by way of regulations to be made by the Minister of Energy,
over the determination of the make-up of the load customer base of the ISMO;
the managed liberalisation, in the discretion of the Minister of Energy, of
the electricity generation by way of the staggered introduction of IPPs for
64 Pursuant to the National Energy Act 34 of 2008.
65 Schalk Burger, ‘South Africa Hopes for Incremental Smart Grid Migration’, Engineering News
(30 March 2012), www.engineeringnews.co.za/article/business-needs-crucial-for-eskomsmart-grid-migration-2012-03-30.
255