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Specialist Fields

Energy Law

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We assist businesses in all areas of Energy Law

Energy Law involves the regulation of, and transactions within, the energy sector from its procurement to its generation and distribution, and includes the ancillary commercial and financing related agreements required for the smooth operation of the process.

Our specialist team provides advice and document drafting services relating to the procurement and generation of electricity from both renewable energy sources (e.g. solar, wind and hydro) and non-renewable sources (e.g. coal, crude oil and natural gas), bid preparation and the construction of power plants, energy efficiency (e.g. in relation to buildings) and the licensing of energy-related developments (e.g. pipelines and the storage, refining and retailing of oil and gas), project finance and the drafting of power purchase, rent to own, operation and maintenance, engineering, design, supply and installation agreements.

We all rely on energy. I believe our aim in the legal sector is to assist our clients in finding solutions which will help create a more sustainable and efficient energy environment.

- Alayne Meinesz, Caveat Panel Member

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Former Clients

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Energy Regulations

In South Africa, the regulation of the electricity sector falls under the jurisdiction of NERSA, one of three energy regulators established under the National Energy Regulator Act, 2004 (NRA), which regulates electricity, piped gas and petroleum pipeline industries.

Legal Assistance with Energy Projects

Energy projects require input from a wide range of overlapping fields of law including commercial law, public procurement law, construction and engineering law, project finance law, environmental law and regulatory compliance. As such, most major energy companies and energy projects require a multidisciplinary team of energy lawyers to achieve the required result. Caveat’s team assist with all aspects of the process including the drafting of bid documents, conducting environmental impact assessments, drafting of construction agreements, power purchase agreements, rent to own, EPC and O&M agreements, and relevant project finance-related documents.

Energy cannot be created or destroyed, it can only be changed from one form to another. Our battle in South Africa is to get enough energy to avoid load-shedding and sustain the economy. Renewable energy has become forefront in this battle by creating new generation capacity by using alternative sources. In the legal field, we have focused our expertise on assisting our clients in achieving this goal.

- Robyn Bandey, Caveat Panel Member

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FAQs

Frequently asked questions on Energy Law

In South Africa, the regulation of the electricity sector falls under the jurisdiction of NERSA, one of three energy regulators established under the National Energy Regulator Act, 2004 (NRA), which regulates electricity, piped gas and petroleum pipeline industries.

Yes, South African companies are allowed to generate up to 100 MW without applying for a generation license from NERSA.

Private companies can legally sell you electricity if generation is less than 1 megawatt (MW) – which only requires municipal or Eskom technical sign-off to supply their owners or feed into the grid.

The normal processing time for a license application is 120 days once all relevant information has been provided (see however below commentary regarding the exemption)

i. Note that in sept 2022, Minister Mantashe published draft amendments to Schedule 2 of the ERA for public comment. This amendment follows previous amendments made by the DMRE, first on 12 Aug 2021, again on 20 Aug 2021 and lastly on 5 Oct 2021.

ii. The initial amendments in 2021 increased the licensing exemption threshold from 1 MW to 100 MW with the intention of unlocking additional electrity capacity in the country and mitigating the impact of load shedding. Specifically, the 2021 amendments provided that the operations of a generation facility, with or without energy storage, with a capacity of no more than 100MW and a point of connection on the transmission or distribution network, are exempt from obtaining a generation license, but are required to register with NERSA. The circumstances applicable to this exemption are where the supply of electricity either involves or does not involve wheeling, and where a generation facility does not export or import any electricity onto or from the transmission or distribution power system.                         

iii. The draft amendment published in 2022 seeks to remove the 100MW licensing celling by exempting the operation of any generation facility with or without energy storage of unrestricted capacity with a point of connection on the transmission or distribution power system as well as the trading of electricity by a reseller in circumstances set out in the proposed Schedule 2 of the ERA. These facilities must still comply with the relevant codes approved by NERSA and must be registered with NERSA. The process to register with NERSA is intended to be much less onerous than obtaining a generation license, particularly with regard to the commitment made by the regulator to remove the requirement to have a signed power purchase agreement in place.

iv. The exemption is likely to increase wheeling activity in South Africa, which involves a financial transaction whereby a non-Eskom generator sells electricity to end use customers via a transmission or distribution network. According to South Africa’s Transmission Grid Code and Distribution Network Code, non-Eskom generators and Eskom Generators are entitled to non-discriminatory access to the national grid. However there are still several challenges that must be overcome in order for wheeling to take place on a large scale. There is no harmonised framework for municipal wheeling tariffs. Increased wheeling activity calls for the development of network and balancing rules in order to manage generation forecasting and offtake loads.                 

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