To address the capacity-constrained national grid, the Interim Grid Capacity Allocation Rules (ICGAR), released by Eskom’s Grid Access Unit (GAU) in 2023, have shifted from a first-come, first-served connection process to a first-ready, first-served model.
Broadly speaking, the ICGAR aims to provide clarity on several fronts, including the documents to be included in a grid connection application, the guidelines governing the budget quote application process, how project readiness is determined, and various Budget Quote Conditions.
Click here to view a high-level overview of the grid connection process from the cost estimate letter stage to the allocation of grid capacity.
On 12 March 2025, the GAU released the IGCAR Assessment Criteria Document, which seeks to clarify the criteria used to assess the readiness of a project, and guides budget quote applicants on how to package their submissions to the GAU.
Some notable points from the IGCAR Assessment Criteria Document are outlined below.
Traders
According to the IGCAR Assessment Criteria Document, Eskom acknowledged that clarity is required on a trader’s role in the grid allocation process. For this reason, Eskom stated that ‘no traders’ details will go into Network Service Provide (NSP) consent letters from 8 November 2024. Eskom further noted that traders ‘will be seen as end users who actually consume energy … and therefore must provide account details of account /Point of Delivery for the NSP letter’.
Prior to the IGCAR Assessment Criteria Document being published, applicants were able to obtain NSP consent letters by naming the relevant trader to whom they intended to supply their energy. The GAU has sought to close the loop on committed offtakers and now requires that traders provide the list of their customers to the GAU to obtain the NSP consent letter. Â
The NSP consent letter is required for any application to NERSA for registration in terms of Schedule 2 of the Electricity Regulation Act, 2006 and is therefore required as part of the readiness assessment under IGCAR.Â
The GAU states in multiple instances that, in terms of the documents to be submitted as part of a budget quote application, the generator’s maximum export capacity (MEC) must match the end-user’s notified maximum demand (NMD). Applicants will need to consider the GAU’s emphasis on this issue.
The GAU further requires that traders furnish Eskom with their trading licences. This was not the case prior to the IGCAR Assessment Criteria Document being published. The GAU previously accepted a demonstration from traders that they had applied for their respective trading licences.
Environmental authorisations and water use licences
The IGCAR requires that an applicant must furnish an environmental authorisation (EA) and a water use licence (WUL) as part of its application, for purposes of assessing the readiness of the project. It has now clarified that the project must ‘preferably have an EA’, but that the GAU may approve the application if this is not the case ‘depending on the project and the risk’ and provided that the GAU ‘does not spend any unrecoverable money.’Â
Eskom has similarly said they will accept proof of submission of the application for a WUL. This is aligned with Eskom’s clarification statements made in 2023, where it held that they ‘may accept proof of submission of application to relevant authorities … as commensurate compliance taking into account specific details and circumstances of the project, including unreasonable delays in processing such applications by the relevant authorities.’Â
Both the EA and WUL have long lead times, and these clarifications allow applicants to commence with budget quote applications sooner.
Power Purchase Agreements
The GAU noted that it would accept power purchase agreement (PPA) heads of terms in lieu of an executed PPA, but not in the case where ‘the power is used for offsetting and own-use’.
IGCAR guarantee
Under the IGCAR, the GAU requires that the applicant furnish it with a Grid Capacity Allocation Guarantee (IGCAR Guarantee), which may be called upon where the customer has:
- ‘breached any requirement of the Budget Quote or the customer has failed to comply with any terms of its Budget Quote and/or related Connection Agreements and/or related grid connection undertakings and/or Budget Quote development milestones as agreed to between Eskom and the Customer; or
- had its reserved capacity or allocated capacity revoked as a result of the Customer’s actions; and/or
- failed to utilise the allocated grid capacity within the timelines stipulated in the Budget Quote.’
The GAU has reiterated that the IGCAR Guarantee must be the ‘Eskom-approved template original IGCAR guarantee’. Albeit not a new requirement, this form is onerous and secures a broad range of customer obligations.
The clarifications to IGCAR that relate to the EA, WUL and the acceptance of PPA term sheets provide some welcome leniency to the readiness assessment requirements in the context of a lengthy and expensive grid connection process.
However, the applicants who intend to supply their energy to traders should note the new criteria. In terms of the IGCAR Assessment Criteria Document, traders are required to be more ‘ready’ than before and must be able to furnish their trading licences and list of customers, demonstrating a committed offtake that matches the applicant’s MEC.
