Draft Electricity Transmission Infrastructure Regulations (ETIR)
A step closer towards market certainty on the procurement rollout of the transmission infrastructure projects 

On 3 April 2025, the Minister of Electricity and Energy released the draft ETIR for public comment as part of an effort to address South Africa’s grid capacity constraints.

The ETIR encompasses the procurement regulations related to acquiring electricity transmission infrastructure, which may include the design, construction, funding, management, maintenance, or operation of that infrastructure (“transmission capacity”).

The ETIR applies to:

• The consultation and procurement requirements for the Minister’s determinations issued in relation to the transmission capacity.
• Other matters that may assist with the implementation of the Minister’s determinations.

What is the purpose of the ETIR?

• Facilitate planning for the procurement of transmission capacity from private parties.
• Support measures to enhance the reliability and security of the national transmission power system.
• Facilitate electricity generation connection into the transmission power system.
• Ensure market consistency and predictability in the implementation of the Minster’s section 34 determinations.

Key takeaway points of the ETIR:

Market certainty

• Transmission capacity must be procured under the Minister’s determination. This validates the process and provides legal certainty to the market in the same way the REIPPPP was procured and implemented.
• The buyer (the NTCSA) is bound by the outcome of a procurement process the procurer (the Department of Electricity and Energy) conducts.
• The buyer must also conclude a transmission services agreement with the transmission services provider – similar to how it must conclude a PPA with the preferred bidder under REIPPPP.

Feasibility studies – to ensure legal, financial and technical bankability

The EITR also entitles the Minister or the Department to secure a feasibility study in respect of the transmission capacity. The feasibility study as a base should cover:

• Anticipated cost of the transmission capacity.
• Proposed allocation of key financial, technical and operational risks between the buyer/user and the transmission service provider.
• Material legal, financial and technical requirements including consents required to establish the transmission capacity.

Cross-border

The EITR does not only apply to localised procurement but extends to the Minister also issuing and implementing determinations for cross-border transmission capacity.

Key considerations in the transmission services agreement

• The transmission services agreement will consider:
  • Value for money.
  • A transfer of appropriate technical, operational and financial risk to the transmission services provider.
  • Effective mechanisms for the implementation, management, enforcement and monitoring of the transmission services.
  • Permit an adequate due diligence required from the buyer/user on the transmission service provider’s capacity to meet its obligations.
• The buyer will be required to provide the procurer and the transmission service provider with such information and documentation and access to its transmission power system to ensure an effective interface with the transmission services.

Cost recovery

• NERSA will determine licence conditions on the setting or approval of prices, charges, rates and tariffs charged by licensees.
• When setting or approving a transmitter’s tariff, NERSA will also ensure the buyer/user is able to recover (at least) the full amount of the costs incurred by the buyer or user.
• Such cost recovery will include:
  • Capacity or availability payments.
  • Expropriation costs and reimbursement to the transmission service provider for the cost of acquisition of servitudes and similar rights.
  • Any other payments made by the buyer or user in terms of the transmission services agreement.
  • Administration and contract management costs for administering the transmission services agreement.
  • All other costs reasonably incurred by the buyer.
• The buyer will request NERSA to issue a cost recovery assurance letter, and within 30 days, NERSA will respond, confirming the categories of costs that will be recoverable through the transmitter’s tariffs.

The draft ETIR examines each aspect of implementing a procurement programme for transmission, ensuring legal, technical, and financial certainty, and includes a cost recovery mechanism to instil market confidence.

Certain aspects necessitate a detailed examination of risk allocation for transmission projects, the process for interfacing with the transmission system, and the execution of key project objectives.

Responses to the draft ETIR must be made to the Minster by 3 May 2025.

For deeper market insights and engagement with the ETIR, contact Ricardo Pillay to schedule a consultation.