The National Energy Regulator of South Africa (Nersa) will hold public hearings in April as part of a consultation process designed to finalise new rules for small-scale solar photovoltaic (PV) generators wanting to supply electricity from their homes or businesses into the grid.

The regulator has released a consultation paper titled ‘Small-Scale Embedded Generation: Regulator Rules’ to guide the public consultations, with March 25 set as the closing date for written submissions. A public hearing is set down for April 10 and Nersa plans to publish the new regulatory framework by the end of May.

The regulator argues that it has become “urgent” to introduce “proper” regulatory rules for small-scale embedded PV generation, owing to the fact that grid-tied rooftop solar is already being deployed in the absence of a legal framework for the implementation of projects between 100 kW and 1 MW.

In fact, it says grid-tied rooftop solar “is alive and growing”, noting that several municipalities have already drawn up procedures for connecting such systems. The draft update of the Integrated Resource Plan (IRP) also estimates that embedded residential and commercial PV has the potential to be as high as 22.5 GW by 2030.

The consultation paper proposes a two-phase approach for the introduction of standardised tariff schemes, with the immediate focus being on the rules for a modified “net-metering scheme” with different tariffs for exporting and importing energy for small-scale embedded generation up to 1 MVA of installed capacity”.

During the second phase, more complex structures for handling fees, subsidies, levies and taxes will be considered. But such changes will be introduced later as it will require changes to policy and IRP targets.

The paper suggests that replacing the current licensing regime with a registration process could reduce the regulatory burden on households and businesses keen to install grid-tied rooftop solar.

Should the proposal be accepted small-scale embedded PV generators would simply need to submit an application to a licensed distributor, which will maintain a database of the generators, which will be submitted monthly for registration with Nersa.

However, another key focus of the paper is to balance the incentives provided to embedded generators with the revenue risks posed to the utility in an event of large-scale uptake.

“As the penetration of small-scale embedded generation grows  . . . tariffs and regulatory policies need to ensure that the utility can collect enough revenue to cover its cost of supply and continue to safely and reliably provide electricity services to all its customers,” Nersa states, noting that most tariffs for residential and small customers are currently not cost-reflective.

Nersa proposes that the various components of the tariff structure, from fixed network costs to connection and metering costs, be considered for both the import and export credit tariff so as to ensure “a fair recovery of revenue” for the generator, the distributor and other consumers.