Explainer: How new government standards will affect solar and battery energy bidders

South Africa’s complex regulatory processes are a barrier to the development of renewable energy projects that could play a role in resolving the country’s energy crisis.

To streamline the process of bringing renewable energy projects to fruition, the sector has called for regulatory hurdles to be removed, and for infrastructure upgrades to be done to enable the addition of renewable energy to the electricity grid.

One of the difficulties is securing permits and licences crucial for project commencement, said Alecia Pienaar, of law firm Cliffe Dekker Hofmeyr.

Pienaar said bureaucratic red tape often results in prolonged delays and inflated costs, which hurt companies relying on external investments. Added to that, limited capacity has created a bottleneck to the integration of renewable energy into the national grid.

Tariff structures and pricing mechanisms add another layer of complexity, as do environmental regulations and land acquisition processes. Overcoming these regulatory barriers requires concerted efforts from government bodies, regulators, industry players, and affected communities, she said.

The measures renewable energy providers can do to expedite the legal processes include undertaking environmental consultations and research beforehand, Pienaar said, adding that regulatory bodies had made significant strides in easing regulatory obstacles to accelerate energy projects.

Energy companies that have called for streamlined regulatory processes and clearer policy frameworks include Solar Capital, Biotherm Energy, ACWA Power and Enel Green Power, which faced delays in obtaining permits and grid connections for their solar projects.

Over the past decade, the department of forestry, fisheries and the environment has undertaken strategic assessments of energy technologies and grid infrastructure aimed at identifying activities that can be exempt from environmental authorisation under the National Environmental Management Act (Nema), streamlining the approval process.

One notable initiative involves the exclusion of specific activities related to solar photovoltaic and battery energy storage systems from environmental authorisation requirements under certain conditions.

Last month, in response to the calls by the companies in the sector, Forestry, Fisheries and the Environment Minister Barbara Creecy gazetted two standards to address the bureaucratic challenges.

These include: 

Battery energy storage systems exclusion norm: This excludes certain activities associated with the development or expansion of battery storage facilities in areas of low or medium environmental sensitivity from environmental authorisation requirements.

Solar exclusion norm: This excludes activities related to the development or expansion of solar PV facilities in areas of low or medium environmental sensitivity.

The rules also specify that re-registration is needed when ownership of the battery storage or solar PV facility changes, whether it is before, during or after construction.

Non-compliance with various provisions of these standards is an offence in terms of Nema and may attract a fine of up to R10 million or imprisonment of 10 years, or both, according to the gazette.

Both norms apply to projects in areas identified by the environment department and the environment’s screening tool as having low or medium environmental effects, Pienaar explained.

The norms cover listed activities specified in the Environmental Impact Regulations and extend to associated infrastructure, including electricity transmission and distribution infrastructure.

Procedures 

These norms expedite grid connections for companies and adherence to procedural requirements remains essential.

According to the gazette, before starting a project, experts need to check the area to ensure it will not harm the environment.

For companies to have a seamless process they must write reports summarising their findings, after which consultations with affected people will be required, Pienaar explained.

“A physical site sensitivity verification (SSV) inspection [is] to be undertaken by qualified specialists and to be supplemented by available desktop information,” she said.

“Should it be confirmed as part of the SSV process that species of concern will be impacted, or that the cumulative impacts are not acceptable, the exclusion under the norms will not apply and application will have to be made for an environmental authorisation.”

Only after the consultation process is completed can the application to the environment department be made to register the project.

“The competent authority must register projects within 10 days of receiving all required information. Non-compliance constitutes an offence under Nema, with penalties of up to R10 million or imprisonment,” Pienaar said.

She reiterated the importance of compliance with environmental regulations, not only to ensure faster project approval but also to promote environmental protection and the involvement of the affected people.

“By navigating the regulatory landscape efficiently, stakeholders can foster innovation and investment in renewable energy projects while safeguarding environmental interests,” Pienaar said.