COMMUNITY SOLAR REGULATION

Introduction

Community solar refers to a solar-generation project in which several households, businesses, community organisations or public institutions collectively participate in, purchase from, or receive benefits from a shared solar facility. In South Africa, there is no single statute devoted exclusively to community solar. Instead, projects are regulated through the Electricity Regulation Act 4 of 2006 (ERA), municipal electricity powers, NERSA licensing and registration rules, distribution-grid codes, wheeling arrangements, tariff regulation, land-use law and environmental legislation. The Electricity Regulation Amendment Act 38 of 2024, effective from 1 January 2025, further restructures the electricity market and provides for competitive electricity trading and expanded market participation.

Licensing and Registration

A community solar facility connected to the national or municipal network must comply with the ERA and applicable NERSA requirements. The precise regulatory treatment depends on the facility’s capacity, connection arrangement, electricity sales structure and whether electricity is exported through a transmission or distribution network.

NERSA clarified in 2026 that registration requirements for embedded generation depend particularly on installed capacity and the existence of a grid connection, rather than simply on whether electricity is exported.

Community projects therefore require early assessment of whether generation, trading, distribution or resale activities require registration, licensing or exemption.

Wheeling and Shared Electricity

A major mechanism for community solar is wheeling, through which electricity generated at one location is transported across an existing electricity network and financially allocated to participating consumers elsewhere.

The current regulatory framework recognises generation facilities supplying one or more customers through wheeling where appropriate grid-connection agreements have been concluded with the transmission or distribution licensee.

Community projects must therefore address network-use charges, metering, reconciliation, connection agreements and responsibility for technical losses.

Municipal Authority

Section 156 of the Constitution gives municipalities important responsibilities concerning electricity reticulation. Municipalities commonly hold distribution licences and supply electricity to consumers within their jurisdictions.

Consequently, community solar projects connected to municipal networks may require municipal approval for embedded generation, technical connection, metering and wheeling. Municipal tariff structures must also operate consistently with ERA requirements and NERSA-approved regulatory arrangements.

Case Name/Citation: Eskom Holdings SOC Ltd v Resilient Properties (Pty) Ltd and Others [2020] ZASCA 185; 2021 (3) SA 47 (SCA)

Facts: Eskom sought to interrupt electricity supplied to municipalities that had failed to pay substantial electricity debts.

Legal Issue: Whether Eskom could exercise its statutory powers without considering municipal constitutional duties and intergovernmental obligations.

Judgment: The Supreme Court of Appeal emphasised that municipalities are constitutionally and statutorily responsible for providing electricity as a basic municipal service and that Eskom and municipalities operate within a broader public-law framework.

Legal Principle/Ratio: Electricity distribution is not merely a contractual activity; it involves constitutional duties, statutory obligations and cooperative government.

Significance: Community solar arrangements involving municipal networks must therefore respect municipal distribution responsibilities while enabling lawful decentralised generation.

Case Name/Citation: Eskom Holdings SOC Ltd v Vaal River Development Association (Pty) Ltd [2022] ZACC 44

Facts: Eskom reduced electricity supplied to financially distressed municipalities after disputes involving unpaid accounts and network problems.

Legal Issue: Whether electricity restrictions were compatible with constitutional and statutory responsibilities toward affected communities.

Judgment: The Constitutional Court stressed that municipalities bear constitutional obligations to provide services and that electricity-sector decisions must be considered within that regulatory framework.

Legal Principle/Ratio: Exercise of electricity-sector powers must account for constitutional service-delivery obligations and the consequences for communities.

Significance: Community solar can support resilience and local electricity access, but projects must remain integrated with lawful municipal and national electricity governance.

Case Name/Citation: Eskom Holdings SOC Ltd v Letsemeng Local Municipality [2022] ZASCA 26

Facts: The dispute arose from municipal indebtedness and proposed interruptions of bulk electricity supply.

Legal Issue: Whether Eskom’s contractual rights could be exercised independently of its constitutional responsibilities as an organ of state.

Judgment: The Supreme Court of Appeal held that Eskom’s relationship with municipalities extends beyond ordinary contract law because electricity enables municipalities to perform constitutional service-delivery obligations.

Legal Principle/Ratio: Electricity governance requires coordination between public authorities and must protect municipalities’ ability to discharge statutory duties.

Significance: Shared solar schemes should be structured through transparent agreements between generators, communities, municipalities and network operators.

Consumer and Community Protection

Community-solar regulation must additionally address ownership rights, allocation of electricity credits, transparent tariffs, consumer contracts, dispute resolution and protection against misleading claims concerning expected savings.

Where community solar is developed on communal or publicly controlled land, valid land-use authority, community consultation and environmental approvals may also be necessary.

Conclusion

Community solar can democratise renewable-energy participation and provide electricity benefits to consumers unable to install rooftop systems individually. South African law regulates these projects through the ERA, NERSA registration and licensing requirements, municipal distribution authority, wheeling rules and grid-connection standards. Effective regulation must balance decentralised energy participation with network security, transparent pricing, municipal constitutional responsibilities and meaningful protection of participating communities.