South African municipalities are asking whether the full impact of small-scale embedded generation (SSEG) has been properly factored into the draft Integrated Resource Plan (IRP2023).

For Sustainable Energy Africa project manager Zanie Cilliers, a striking feature of South Africa’s municipal grid is the capacity of existing SSEG systems – smaller than 1MW – is already equal to that of utility-scale renewable energy systems (procured through the REIPPP programme), which are generally sized 50MW+.

A newly released Status of Embedded Generation in South African Municipalities report [read below] shows that according to SAPVIA’s Solar PV Installed Capacity Data Dashboard, by the end of the first quarter of 2023, more than 5,658MWp of solar PV had been installed in SA.

If you deduct the 2,287MWp attributed to the REIPPP programme and other non-private IPPs, the remaining 3,372MWp is attributable to embedded generation and private wheeling.

An Eskom study – monitoring the change in system demand due to solar radiation variations – estimates similar figures for the first quarter of 2023. Their study indicated that by March 2023, 3,243MWp of solar PV had been installed. By September 2023, this figure had grown to 4,883MWp, and increasing monthly at an average rate of 273MWp.

The SSEG report shows that the number of municipal distributors which allow embedded generation on their networks has risen from 10 in 2016 to 71 in 2023.

Although it seems like a low proportion of municipalities, the 43% of 165 municipal distributors that allow embedded generation (EG) on their networks cover most of the total municipal electricity demand and population.

Embedded generation IS affecting loadshedding, just not how you think

Cilliers spoke about embedded generation in municipal grids when running through some of the questions she has heard asked in the various online IRP discussions. This was during an AMEU/SALGA workshop for municipalities to share their thoughts on the draft IRP2023.

She questioned whether the new IRP draft adequately takes SSEG into account. She thinks SSEG may have affected the lower-than-expected loadshedding situation in winter of 2023. “Demand was lower than expected. That could potentially have been due to behind-the-meter PV,” she posited.

Sustainable Energy for Africa recommended that the future IRP needs to recognise the rapid changes in the energy sector. Specifically, that raising the embedded generation licencing cap has resulted in new generation capacity being increasingly situated at distribution level, which will impact transmission line limitation assumptions.

Thus, she suggests policy enablement and regulatory mechanisms are needed to allow system balancing and adequacy to be addressed by the national government, rather than concentrating on generation expansion.

“We’ve seen the impact of regulatory mechanism in the raising of embedded generation cap, so there’s a lot that can be done to encourage what we want to see, which is a system which is balanced and adequate. Municipalities are key stakeholders here because most of the demand drivers for the future sit in their networks. So, the plan should try and meet capacity requirements as much as possible,” she explained.

Many small-scale embedded generation systems not registered

The 4,883MWp of installed solar PV capacity measured by September 2023 reflects private solar for embedded generation (EG) and wheeling. Eskom estimates that about 2.5GWp is private wheeling, leaving approximately 2,383MWp as embedded solar PV.

“While some of this EG is located on Eskom’s distribution network, a significant portion is also connected to municipal distribution grids. This split is not currently known,” says the SSEG report.

“Based on Eskom’s estimates, the 2,383MWp (as of September 2023) of solar PV EG represents 4% of the national total generation capacity of around 58GW. Rooftop PV is thus a significant contributor to national capacity.

“These systems connected to the distribution network, often unofficially, may pose challenges for network operators in future. Going forward, it is important to consider how to minimise unofficial systems and maximise officially registered EG connections.”

Most of the report survey respondents indicated that their database of approved EG applications did not capture all the systems installed in their municipalities. A large number of systems remain unregistered.

They noticed larger systems were more likely to be registered as these are very visible, and owners are cautious about complying with insurance requirements. Smaller, typically residential systems tend not to register.

In Eskom’s distribution area, a similar issue appears to exist. Only 655MW of EG on their grid is authorised by Eskom. When combining the two figures, the total still falls far short of the rooftop estimates recorded through national Eskom estimates and SAPVIA figures.

“While there remain uncertainties in the data, the estimated volume of unregistered MW (45% of all EG, or 22% of the total private PV capacity) is a concern,” said the report.

What do municipalities do if all the paying customers flee?

Cilliers pointed out that if the point of an IRP is to address the country’s energy security, then the suggested pathways may not necessarily be a least-cost scenario. “But there is a risk linked to this. If the IRP is not optimised, then the resulting price signals will accelerate the uptake of embedded generation by customers who can afford it, which are the customers the municipalities get their revenue from that they use to cross-subsidise the poor.

“So, the cost burden of all the expensive options will be left with the municipalities and the poor [whom] they service. Municipalities are already struggling to provide services. But in the end, they may be left with most of the cost burden, which is a big risk at the local level.”

Sustainable Energy for Africa suggested that while there are no definitive figures around how much embedded generation will come online post-2027, the draft IRP excluding the possibility skews overall cost estimates and assumptions.

Also, that up-to-date costing assumptions for technologies, including learning curves, should be included in the IRP2023 because the current cost assumptions in the draft are inadequate. “Storage, in particular, is quite crucial to high variable energy systems,” said Cilliers. ESI