17 Mar 2021
When I delivered my Budget 2021 Address in the Provincial Parliament yesterday (16 March 2021), I announced that we will spend R48.8 million over the medium-term and provide a further R20 million in the provincial reserves for the Municipal Energy Resilience (MER) Project in the Western Cape.
I was also pleased to announce that the six candidate municipalities participating in the first phase of the MER Project in this financial year are the:
And, as they are a municipality that has already done excellent work on developing energy resilience, we are also pleased to be collaborating with the City of Cape Town on the MER Project.
We know that load shedding costs the economy about R75 million per stage, per day in the Western Cape.
When it comes to the economy Covid-19 is a “left hook”, and load shedding is a “right hook”, which together often results in a knock-out blow that risks compromising economic recovery.
Which is why we launched the three-year MER Project last year to support municipalities to take advantage of the new energy regulations to generate, procure and sell their own power so that we can become more energy secure in the Western Cape.
The MER Project is spearheaded by our Green Economy unit at the Department of Economic Development and Tourism, who are working in collaboration with the Department of Local Government and Provincial Treasury to enable the development of energy projects and engage with municipalities on multiple fronts.
The procurement of energy at utility and municipal distribution scale, such as bulk energy purchases from Independent Power Producers (IPPs), under conditions of developing and evolving policies and regulations is a complex and challenging task. Municipalities may not have the policies, plans, resources, funding, or procurement expertise to procure wholesale electricity from sources other than Eskom, specifically IPPs.
Neither have all municipalities’ electricity distribution systems been technically evaluated to clarify their readiness to support new electricity generation and energy trading.
To identify the candidate municipalities for the MER Project we conducted a readiness evaluation to determine which municipalities were most equipped and met the conditions required to take advantage of the energy regulations to develop their own power generation projects and also procure power from IPPs.
Now that the candidate municipalities have been announced, we will be confirming willingness and commitment through a Memorandum of Understanding, and then working closely with them in the first phase of MER Project to identify pioneering energy projects and develop a roadmap to roll out the projects.
This process will consider multiple pioneering renewable energy technologies and scales, cost options, scale of investment required, location issues, risks, municipal readiness needs, infrastructure needs, timelines to get capacity onto the grid, transaction and procurement mechanisms and regulatory issues.
Any learnings from projects implemented with the candidate municipalities will be applied to future projects in other municipalities. While this project should enable municipalities to be able to buffer residents and businesses from the impacts of load shedding, they will still continue to be connected to the national grid as we won’t be able to meet 100% of energy demand through renewable energy at this stage.
We will also work closely with national government to explore how the new energy regulations could lead to renewable energy generation projects within municipalities in the Western Cape.
Other projects that provide continued support to all municipalities in the Western Cape include support to develop and revise SSEG feed-in tariff frameworks and feed-in tariffs for solar PV, engagements with businesses to drive take-up of solar PV, support to municipalities to enable wheeling, support to energy sector businesses; the provision of energy technology and cost options to businesses and municipalities; and support to green economy investors in the Western Cape.
The MER Project is just another example of how we are working hard to become more energy resilient in the Western Cape.