On 20 June 2025, the National Energy Regulator of South Africa ("NERSA") published the reasons for its decision to approve the National Transmission Company of South Africa's ("NTCSA's") application for congestion curtailment1 to be classified as a constrained generation ancillary service2. This comes after NERSA published a media statement on 9 May 2025 indicating that it had announced during a meeting on 29 April 2025 that it had approved NTCSA's application to curtail electricity generation to free up network capacity and enable it to connect an additional 3 470 MW of new generation capacity in areas where the national grid has been saturated. The decision to approve the application will allow NTCSA to facilitate additional grid connection capacity3 in an amount of 790 MW in the Eastern Cape and 2 680 MW in the Western Cape.
This development follows the publication of the Generation Connection Capacity Assessment 2025 ("GCCA") in October 2023 by Eskom Holdings SOC Limited ("Eskom") which found that the generation connection capacity has been depleted in the Northern Cape, Western Cape, and Eastern Cape. These are some of the most favourable areas for wind and solar PV generation and yet many generation projects in these areas have been denied a connection because there is currently no capacity on the transmission network to connect new generation projects. This is mainly as a result of the projects connected pursuant to the various Renewable Energy Independent Power Producer Programme ("REIPPPP") and Risk Mitigation Independent Power Producer Procurement Programme bid window rounds, as well as an increase in private generation facilities. In Bid Window 6 of the REIPPPP, none of the wind projects were selected for the 3 200 MW allocation due to grid-related constraints. The GCCA indicated that increasing the generation connection capacity of the transmission network in the Northern Cape, Western Cape, and Eastern Cape would require a significant amount of investment, strategic grid planning and would take years to develop and construct.
In January 2024, Eskom published an addendum to the GCCA (the "GCCA Addendum") to inform stakeholders of the potential capacity available on the Eskom transmission network to facilitate connection of generation projects. The GCCA Addendum suggested that by accepting a reasonable share of no more than 10% of curtailment, 3 470 MW of additional wind generation can be connected to the grid almost immediately, with 2 680 MW in the Western Cape and 790 MW in the Eastern Cape.
In May 2024, NTCSA submitted an application to NERSA to request approval for congestion curtailment to be treated as a constrained generation ancillary service. According to the Consultation Paper on Eskom's Application for Congestion Curtailment to be a Constrained Generation Ancillary Service dated 5 July 2024 published by NERSA (the "NERSA Consultation Paper"), curtailment as a congestion management mechanism means using the existing grid in the most optimal manner by accommodating more renewable energy sources in an already constrained network, while preserving infrastructure and grid reliability, in order to alleviate grid congestion.
The NERSA Consultation Paper indicates that in transmission system planning, generation capacity is not added onto the network if the technical limits (thermal, voltage or stability limits) of that particular network have been met. NTCSA accordingly sought approval from NERSA to be permitted to connect additional generation capacity from renewable energy sources on networks that have already reached maximum allowable technical limits, which will increase the probability of the need to curtail generation production. The NERSA Consultation Paper notes that the benefit of the congestion curtailment framework is that it maximises the use of the existing grid by making it possible for additional renewable energy sources to be connected which will increase capacity and reduce the need for load-shedding and the use of expensive open cycle gas turbines.
According to the NERSA Consultation Paper, up until now, the only constrained generation ancillary service applicable in terms of the System Operation Code is the service supplied by conventional power stations to NTCSA by constraining power output below (or alternatively, above) the unconstrained schedule level. NERSA's decision to approve NTCSA's application means that this ancillary service will now be applicable to renewable energy facilities.
The approval is valid from 1 April 2025 to 31 March 2028 (the "Approval Period"), after which it will be reviewed. The approval is subject to certain conditions aimed at protecting consumers from potential cost escalations and incentivising NTCSA to promote the development of transmission infrastructure in the Eastern and Western Cape regions, including the following:
- the maximum curtailment level to be implemented is restricted to the approved allowable revenue for the Sixth Multi-Year Price Determination ("MYPD6") under the ancillary services and energy imbalance line item. Any costs incurred from exceeding this allocation will not be passed on to consumers;
- the use of congestion curtailment as an ancillary service is restricted to facilitating additional generation capacity in the Eastern and Western Cape regions;
- any additional grid connection capacity unlocked through congestion curtailment, along with support by appropriate studies, must be submitted to NERSA for approval before extending the ancillary service to other areas;
- NTCSA must address other forms of curtailment in accordance with the existing grid unavailability provisions outlined in the power purchase agreements or connection agreements. Therefore, curtailment required for over-frequency control (resulting from low demand) will continue to be treated as it is treated currently; and
- NTCSA must report to NERSA on the implementation of congestion curtailment every 6 months over the Approval Period. The report should include information on the capacity connected to the grid through this regime, the curtailment level implemented, records of the curtailment incidents, costs, progress on systems and ancillary service projects.
The media statement also indicates that the implementation of congestion curtailment will be conducted in a non-discriminatory manner and that all generators that experience financial losses due to congestion curtailment will be eligible for compensation (limited to the provisions of the approved MYPD6 revenue application).
NERSA's decision to approve NTCSA's application will hopefully help to alleviate grid congestion, increase generation connection capacity, enhance energy availability in areas with high renewable energy potential, promote investment in renewable energy sources, and boost energy security in the country.
Click here to view the media statement published by NERSA on 9 May 2025 and here to view the reasons for decision published by NERSA on 20 June 2025.
Footnotes
1 "Curtailment" refers to the amount of active power that a generating unit, a power station or a generating facility is permitted to generate is restricted by the system operator, network service provider or other network operator due to network or system constraints (i.e. congestion on the grid).
2 "Ancillary services" are services that are supplied to NTCSA by generators, distributors or end-use customers that are necessary for the reliable and secure transport of power from generators to distributors and other customers.
3 "Grid connection capacity" refers to the amount of generation that can be accommodated on the transmission system at a given time and location without adversely affecting grid reliability and without requiring significant infrastructure upgrades.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
