Cigré C5: Electricity markets and regulation
South Africa has adopted the “single buyer” model as the current electricity market model. The approach is similar to that followed in Brazil, being competitive auctions by government for new generating capacity for different technologies (such as renewables, gas, coal, etc.). The successful parties, being independent power producers (IPPs) from each of these bidding rounds, enter into long-term agreements with the buyer through power purchase agreements (PPAs) for energy and the relevant network service providers (for grid connection).
This market model is just one of a multitude of models employed across the world. Cigré Study Committee C5, Electricity Markets and Regulation, has been studying best practice and experience in this field for a number of years and publishing the results.
NERSA regulates the industry players, which now includes these IPPs. Regulatory practice (mostly from an industry point of view) across the world is included in the C5 work.
Cigré Study Committee C5 is currently active in the following areas:
- Capacity markets
- Demand response
- Grid investments
- Generator market power mitigation
- Regulatory incentives
- Cost of electric service
- Market risk management
The approach is the same as normally followed by Cigré. Each of the above is assigned to a working group, which defines a scope of work, prepares a questionnaire and gets input from across the globe. The results are synthesised into a report and frequently published as a technical brochure. Study committee C5 manages to draw experts from across the world to participate, (as is typical for Cigré) and thus the output often becomes the benchmark study for best practice in that area.
The work for each of the above is in different stages, for some (like cost of electric service), it is only starting while for others (like generator market power mitigation) the report is being finalised. Some of the topics (such as capacity markets) may not be of interest to South Africa at the moment, but is of interest to the Southern African Power Pool (SAPP). Others, such as demand response and grid investments, are very topical because of the current generating capacity constraints and the MYPD3 decision.
The fact that electricity markets have been in existence in other parts of the world for more than 20 years, and that Cigré C5 has been studying these, gives us as South Africans, where these concepts are newly being introduced, the opportunity to learn from other countries’ experiences.
Electricity markets and regulation are fast changing across the world (at least compared to high-voltage technology) and thus the working groups are pushed to complete their work in a relative short space of time, and then move on to the latest topics that would have emerged.
There are currently Southern African members participating in each of the above working groups. To help co-ordinate our actions, the Cigré C5 Regional Activity Group for Southern Africa was established in 2013. Its purpose is to broaden the Southern African participation and interest in the work of Cigré C5.
Contact Rob Stephen, Eskom, Tel 031 204-5693, rob.stephen@eskom.co.za
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