The National Energy Regulator of South Africa NERSA has published a consultation paper regarding an application from Eskom to amend the losses charge calculation methodology for embedded generators.
The generator losses charge is the cost that electricity generators pay to account for power lost when transporting electricity through the grid.
"The proposed change aims to modify the existing formula for calculating technical losses incurred by embedded generators connected to the Eskom distribution network, ensuring that it better reflects the actual costs based on recent technical studies," NERSA said on Thursday.
Eskom intends to implement the amended methodology in the 2026/27 financial year's Eskom Schedule of Standard Tariffs.
According to NERSA not all the generated electricity reaches end-users.
Some of it is lost as heat in conductors, transformers and other network equipment.
"In practice, this means a generator must supply more electricity than what is delivered to consumers, with the difference representing transmission or distribution losses.
Eskom motivates that the charge provides a financial signal that encourages generators to locate closer to demand centres, since plants that are far from major load areas typically result in higher losses," the Regulator explained.
Eskom's recent technical studies and power flow simulations revealed that seemingly embedded generators now contribute to increased network energy losses in most geographical areas.
Moreover, Eskom's studies show that the current rebate system, which offers financial advantages to embedded generators, is no longer cost-reflective and results in an unintended subsidy.
Subsequently, Eskom considers it necessary to amend the losses charge methodology to more accurately represent the costs linked to the use of the distribution network by embedded generators.
Eskom's application proposes changes to the formula, thereby constituting an amendment to section 5.5.1 of the Tariff Code.