The techno-economic impact of a high penetration of embedded generators on South African, Brazilian, Australian and Ugandan distribution networks: A comparative review

Abstract

Owing to current electricity capacity shortages and rising electricity prices in South Africa, customers are opting for self-generation to mitigate the effects of load shedding and offset their electricity bills. In June 2021, the South African government removed the licensing requirement for private generation to encourage the uptake of self- generation, close capacity shortages and promote investment in private generation. While the increase in private generation is seen by the electricity industry as a positive step towards meeting energy supply demands, there are concerns about the impact that high numbers of embedded generation facilities will have on the distributors, i.e., their networks and revenues. The aim of this study was to conduct a review of the technical, economic and regulatory impact of a high number of embedded generators on distributors and their networks. The impact in South Africa is compared with the impact in Brazil, Australia and Uganda. The research study seeks to identify some of the success strategies implemented by these countries to address challenges associated with private embedded generation, and to provide recommendations for South Africa. South Africa compares well with Brazil and Australia in terms of electricity access and installed generation capacity vs population; however, in terms of embedded generation, particularly from variable renewable energy sources, South Africa’s penetration levels are still lower than those of Brazil and Australia, although higher than those of Uganda. The review highlights that the impact of embedded generation is largely driven by technical, economic and regulatory policy changes. The absence of a clear market structure or market direction, enabling legislation and policies, regulatory tools (such as national rules for integration or compensation and unbundled tariffs for some customer categories) make it difficult to minimise the negative effects of a high penetration of embedded generation and to capitalise on potential positive effects. In Brazil and Australia, the success of renewable energy embedded generation is largely a result of clear policy and regulations, which lead and drive positive changes in their electricity industries. Recommendations are made for legislation, policy and regulation changes to support embedded generation, the creation of a clear market structure, and the publication of national guidelines for embedded generation management. In addition, tariffing mechanisms should be reviewed to ensure a fair distribution of costs.