Do I need a NERSA licence to generate or wheel electricity in South Africa?

The legal framework

Electricity generation, transmission, distribution, trading and imports and exports are regulated under the Electricity Regulation Act 4 of 2006 (ERA). Section 7 requires a person to hold a NERSA licence to operate any of these activities unless the activity is exempted under Schedule 2 of the Act.

Schedule 2 was substantially amended in 2021 to remove the licensing requirement for most embedded generation, regardless of size, provided the generator does not sell electricity except to a single customer or through a licensed trader, and complies with grid connection and technical standards set by NERSA and the relevant network operator.

The amendment did not remove the registration requirement. Generators that are exempt from licensing must still register the facility with NERSA under the applicable Schedule 2 conditions, and failure to register is itself a contravention of the Act.

Licensing versus registration

A generation licence is required where a project sells electricity to multiple customers without a trading licence, or otherwise falls outside the Schedule 2 exemption categories. Licensing involves a formal NERSA application, public notice, and compliance conditions attached to the licence.

Registration is the lighter-touch route used by the great majority of rooftop and embedded solar projects, including commercial and industrial installations connected to reduce a single site's demand or to sell to one identified customer. Registration still requires technical, safety and environmental information to be submitted to NERSA.

• Licence: multiple offtakers, third-party sales without a trader, or activity outside Schedule 2 exemptions
• Registration: single-customer generation, self-consumption, or generation sold through a licensed trader
• Both routes require compliance with grid code and connection standards before energising

Wheeling and use-of-system agreements

Wheeling is the transport of electricity generated at one site to be consumed at another, using the Eskom or municipal distribution network as the carrier. Wheeling requires a use-of-system agreement (UoSA) with the network operator that owns the wires between the generator and the customer.

Where the network crosses both Eskom and municipal infrastructure, agreements are typically needed with both operators, and metering and settlement arrangements must be agreed before energy can be wheeled and billed correctly. Municipalities licensed as distributors under the ERA set their own wheeling tariffs and connection rules, and these vary significantly between metros.

A trading licence is required where a party buys electricity from a generator and on-sells it to another customer rather than simply transporting the generator's own electricity, so the structure of the commercial arrangement determines whether a trading licence is triggered in addition to registration.

What NERSA and the network operator need

A registration or licence application typically requires the single-line diagram, generator and inverter specifications, protection settings, an environmental authorisation or exemption confirmation where applicable, proof of land right or lease, and confirmation of compliance with the relevant grid code.

Network operators separately require a connection application, technical impact study for larger installations, and a signed connection or use-of-system agreement before commissioning. These processes run in parallel with the NERSA registration or licence process, not after it.

Realistic timelines

Registration for a straightforward single-customer embedded generator is usually completed within four to eight weeks of a complete submission. Generation licence applications, which involve public notice periods, typically take three to six months. Network connection and wheeling agreements often set the real pace of a project, particularly where a technical impact study is required.