Congestion curtailment as an ancillary service is contemplated to be used to manage network-related constraints and, by taking advantage of the intermittent nature of renewable energy resources, opening up grid capacity and allowing more generators to connect at reduced load factors.

Application and scope of the approval

The Application’s scope aligned with the proposal in the Generation Connection Capacity Assessment 2025 Addendum (GCCA 2025 Addendum) released in January 2024, which considered implementation of a 10% curtailment from 2026 onwards on present and planned operational wind energy generation facilities to open 3,470 MW of grid capacity in the Western Cape and Eastern Cape provinces.

NERSA’s Approval is, however, more restrictive when compared to what was sought in the Application and contemplated under the GCCA 2025 Addendum. The Approval was granted subject to the following conditions:

The Approval’s validity period runs from 1 April 2025 to 31 March 2028, subject to review upon expiry of this period.

• Congestion curtailment as an ancillary service is limited to a 4% cap and may only be used in the Western Cape and Eastern Cape. This translates into 1,580 MW of additional grid capacity across the Western Cape (1,180 MW) and Eastern Cape (400 MW).
• In terms of compensation, public independent power producers (IPP) will remain compensated through deemed energy payments, which may be recovered from the constrained generation ancillary service budget. For private IPPs, the NTCSA will credit the offtaker’s account for the curtailed energy as if supplied; distribution will, in turn, recover these costs from the ancillary services component of the transmission tariff.
• Recoverable curtailment costs are capped at the Sixth Multi-Year Price Determination’s (MYPD6) approved allowable revenue for ancillary services and energy imbalance line item.
• The NTCSA is required to provide implementation reports to NERSA every six months over the three-year period on prescribed matters.
• NERSA must approve congestion curtailment that extends beyond the ambit of the Application.

Reasons for decision

In granting the Approval, NERSA highlighted some key considerations in its Reasons for Decision, with repeated emphasis placed on the fact that the Approval remains a temporary solution that should be implemented in parallel with grid upgrade and expansion efforts, as consumer cost exposure should be capped. Socialisation of the costs as an interim measure is, according to NERSA, justified on the basis that:

• The congestion curtailment framework still represents the least-cost approach for integrating new generation capacity from renewable energy, especially when compared to the costs associated with transmission infrastructure expansion.
• It promotes competition within the sector, reinforcing its resilience and sustainability.
• Managed curtailment can unlock capacity faster at lower socio-economic cost than continued reliance on costly open cycle gas turbines (OCGT) and load-shedding.
• The capacity that is unlocked benefits all customers as it enhances energy security by allowing new generation capacity to connect, thus reducing the risk of load-shedding and dependence on OCGT.
• Economic implications for the consumer are limited as recoverable costs are capped at the approved energy imbalance cost allocation for MYPD6.
• Increased renewable capacity may stimulate local economic development.

Revised GCCA and practice note

The updated GCCA (31 October 2025) formalises the shift from the 10% curtailment assumption in the GCCA 2025 Addendum to a NERSA aligned 4% curtailment cap for the pilot period, which equates to the aforementioned additional 1,580 MW of connectable wind calibrated to local transformer firm capacity and stability constraints and concentrated at specific substations (including Agulhas, Bacchus, Droërivier and Nuweveld/Galenia in the Western Cape, and Neptune and Pembroke in the Eastern Cape).

Complementing the GCCA update, the Practice Note published in October 2025 operationalises how curtailment adjusted capacity will be processed. Critically, the Practice Note ties curtailment capacity allocation to existing Eskom processes (cost estimate letter/budget quote (CEL/BQ) issuance and the Interim Grid Capacity Allocation Rules (IGCAR) regime) and sets clear eligibility criteria: projects at new application, awaiting CEL, in the IGCAR evaluation stage, or allocated with provisional capacity, may participate, whereas projects with valid or effective BQs are generally excluded because they are already embedded in upstream planning assumptions.

The Note further sets out the process to be followed for customers looking to apply for connection capacity that is subject to curtailment. Save for those holding valid/effective BQs, all customers may apply and will receive CELs reflecting curtailment terms, with congestion curtailment capacity reserved after passing IGCAR assessment. Distinction is made between new and pending application and the requirements or options under each.

Conclusion

Congestion curtailment is welcomed as a pragmatic mechanism to unlock constrained grid capacity in the Cape corridors, but purely as a temporary measure. The risk of delays in grid upgrade is twofold. First, after expiry of the initial term, the frequency and depth of curtailment could rise above the intended ~4% envelope, eroding the least cost rationale, increasing ancillary services charges. Further, investor confidence may weaken if projects remain dependent on curtailment beyond the pilot.

The immediate priority remains to use curtailment strictly as a bridge. That is the only path that preserves the framework’s least cost character for end users, sustains market confidence, and reduces curtailment dependence on schedule.