National Transmission Company South Africa (NTCSA) is piloting an Ancillary Services Standard Offer (AS_SO), which is a national programme to procure ancillary service reserves; instantaneous reserves and/or regulating reserves at standard rates. The Ancillary Services Standard Offer is specifically targeting private sector generators/facilities, regardless of technology type, connected to the Eskom system.
Ancillary Services are essential services provided to the System Operator by Generators or Customers apart from primary energy. They are needed to support the reliable and secure transport of power from Generators to Customers. The AS_SO is seeking to procure instantaneous and regulating reserves as defined in the Grid Code.
To keep the South African grid stable, the System Operator must balance supply and demand to maintain a frequency of between 49.85 Hz and 50.15 Hz on the national electricity grid. This is achieved by contracted generators increasing or decreasing their output (MW) and deploying this as “reserves” to maintain the desired system frequency and thereby grid stability.
The objective of the pilot is to test, amongst others, market uptake and the implementation of, and participation in, the AS_SO Programme. The pilot will enable System Operator to evaluate applications on an ongoing basis up to 31 March 2027 or until the budget allocation for the pilot programme has been reached, whichever comes first.
The Standard Offer approach allows the System Operator to purchase reserves at an established instantaneous and regulating reserves standard rate. Qualifying providers that meet the ancillary services technical criteria to provide instantaneous and regulating reserves will be compensated as contracted and shown below when dispatched via the System Operator.
The contracting mechanism will be performance based, with the programme end date of 31 March 2027. Below are the rates at which the private generators will be compensated:
What is required?
Instantaneous Reserve (IR) is a scheduled service to be available for a maximum of 3723 hours per Contract Year and is only triggered to operate once an IR event occurs. When an IR event is triggered, the activation time is within 10 seconds and the IR response must be sustained for 10 minutes. The IR response is limited to 155 event trigger.
Similarly, Regulating Reserve (RR) should also be available for a maximum number 3723 hours per Contract Year and only triggered once an RR event occurs. If RR events are triggered, the activation time is within 10 minutes and the response must be sustained for 1 hour. There is no limit to the number of RR events in a year.
- The minimum plant unit capacity is 50 MW.
- Applications received will be handled on a first-come first-served basis within the programme duration and approved budget.
- The AS_SO pilot programme ends on 31 March 2027.
Process details
- Step 1: Complete the application form, and email it to [email protected].
- Step 2: The application will be technically evaluated.
- Step 3: If the application is approved:
- Sign a standard legal agreement (Ancillary Services Agreement) with NTCSA.
- Register as an NTCSA vendor (subject to meeting vendor registration requirements).
- Testing and certification for each reserve category to commence after signing of the ASA. The seller bears all associated costs therein and any other applicable modification costs.
Frequently asked questions (FAQs)
1. What is the Ancillary Services Standard Offer (AS_SO) programme?
1. A national programme which terminates on 31 March 2027 to procure instantaneous reserves and/or regulating reserves at standard rate(s). The Ancillary Services Standard Offer is specifically targeting private sector generators/facilities, regardless of technology type, connected to the system.
2. What are the basic requirements?
The service provider needs to comply with the technical requirements outlined for the programme. Refer to the technical criteria document “link – technical criteria” for more details.
The application will be subject to a technical evaluation and upon successful evaluation and approval, the service provider will sign a legal contract with NTCSA. The service provider will need to adhere to the terms and conditions of the Ancillary Services Agreement (legal contract). The service provider will be required to register as an Eskom vendor after signing of the Ancillary Services Agreement.
3. Can the seller participate in more than one of the Eskom/NTCSA programmes?
Yes, however, the quantum of reserves (in MW) sold exclusively through the Ancillary Services Standard Offer programme may not be committed to other programmes (e.g., Renewable Energy Independent Power Producer Programme (REIPPP) etc.) or other Eskom/NTCSA demand response/management programmes. The Service Provider has fully considered the Capacity of each Facility against any Eskom or other third-party programmes or own use options.
4. How long can a private generator contract with NTCSA through the Ancillary Services Standard Offer?
The Ancillary Services Standard Offer contracting period is from the commencement date of provision of the ancillary services up to the programme termination date of 31 March 2027.
The Ancillary Services Standard Offer contracting period is from the commencement date of provision of the ancillary services up to the programme termination date of 31 March 2027.
The Ancillary Services Standard Offer is a performance-based programme with an instantaneous reserves rate of R957/MW and a regulating reserves rate of R638/MW for the first year of the AS_SO programme (i.e., 1 April 2024 to 31 March 2025). These rates are subject to CPI increases as per latest Stats SA indicators in years on each of 01 April 2025 and 01 April 2026, respectively. Refer to the technical criteria document “link – technical criteria” for more details.
6. How can a generator participate in the Ancillary Services Standard Offer?
The application form is provided on this link, “link – application form” and the application process has 3 main steps as follows:
- Step 1: Complete the application form and the associated mandatory forms and email it to [email protected].
- Step 2: The application will be technically evaluated.
- Step 3: If the application is approved:
- Sign a standard legal agreement (Ancillary Services Agreement) with NTCSA.
- Register as an NTCSA vendor (subject to meeting vendor registration requirements).
- Once approved the applicant will be informed and the contracting process will commence with the dedicated official.
7. When will the required testing and certification of reserves takes place?
Testing and certification for each reserve category to commence after signing of the Ancillary Services Agreement. Upon successful completion of the certification tests, a certificate will be issued to the service provider by the System Operator.
8. Will the seller be compensated for costs incurred during testing for certification?
No, the service provider bears all associated costs to conduct the test and any other applicable modification costs to deliver the contracted service.
9. What does “private sector generators/facilities connected to the system” mean?
The system means, as applicable, the Transmission System or the Distribution System.
The “Distribution System” means the distribution network of the Distributor which operates at a nominal voltage of 132 kV or less, as described in the Codes, as that system may be refurbished, modified, extended or developed from time to time during the Term (but, for the avoidance of doubt, not including any private network used by a Facility or customers of the Distributor.
The “Distributor” means Eskom Holdings SOC Limited acting through its distribution division, or any entity to which such functions of Eskom Holdings SOC Ltd are transferred pursuant to a restructuring of the South African electricity market, or otherwise as mandated by the Government or any other Responsible Authority;
The “Transmission System” means the national transmission system of the NTC, consisting of all lines and substation equipment which operate at a nominal voltage of above 132 kV, as that system may be refurbished, modified, extended or developed from time to time during the Term (but, for the avoidance of doubt, not including any private network used by a Facility or customers of the NTCSA).
10. Where can a service provider get more information?
“Visit the link https://www.ntcsa.co.za/transmission/ancillary services/Ancillary Services Standard Offer advert – AS_SO webpage”
11. What are the main applicable standards/codes/requirements for participation in the programme?
- Compliance to the South African Grid Code (SAGC) – LINK
- Compliance to the ancillary service certification and performance monitoring standards for reserves, “insert link” – LINK
- Compliance to the ancillary service certification and performance monitoring standard for Battery Energy Storage Facilities (if applicable) – LINK
- Compliance to the scheduling and dispatch rules – LINK
12. During the execution of the contract, i.e., sale of reserves to NTCSA through the Ancillary Services Standard Offer, what is required of the service provider?
As a minimum the service provider will be required to provide a daily day-ahead forecast of reserves to be supplied as per the NERSA’s Scheduling and Dispatch rules with the applicable metering and network capacity in place. More information is contained in the contract proforma.
13. How does the service provider get paid through the Standard Offer?
The service provider will be paid as per the terms agreed to with NTCSA on the Ancillary Services Agreement contract. The payment process consists of data retrieval, performance monitoring, generation of payment report, receipt of invoice from the service provider and lastly making the payment to the service provider.
14. Can municipalities that are not in good financial standing be considered?
The programme rules require that all providers participating in the programme be in good financial standing.
15. Are there penalties for underperformance on contracted reserves?
Yes, the Ancillary Services Agreement makes provision for penalties in the event of underperformance.
16. Are specific technologies going to be targeted by NTCSA for the AS_SO?
No, the Ancillary Services Standard Offer programme is technology agnostic meaning all service providers who meet the technical criteria may apply.
17. Is there a minimum plant capacity to participate in the Ancillary Services Standard Offer?
Yes, the minimum plant capacity per unit is 50 MW. In the case of inverter-based plants, the minimum plant capacity as a facility is 50 MW.
18. Can a service provider still apply if there is an existing Power Purchase Agreement (PPA) with Eskom and associated agreement(s) or any other existing type of agreement with a municipality prior to application?
Yes, however the service provider will be responsible for applying for, obtaining, maintaining, renewing, and adhering to all approvals and consents applicable to existing power purchase agreements (PPAs) and other existing agreements in order to enable participation in the AS_SO pilot programme and fulfil its obligations under the PPA for its term. Failure to do so will be at the entire risk of the service provider, and no relief will be given for errors or omissions by the service provider.
19. Is there a minimum offtake included in this programme?
There shall be no obligation on the Buyer to offtake any minimum amount of Ancillary Services for any period during the term of the contract.
20. How will the application be managed?
Applications received will be handled on a first-come first-served basis within the programme duration and approved budget.
21. Is Supplier Development, Localisation and Industrialisation (SDL&I) applicable to the AS_SO programme?
Yes, the requirements are outlined below.
Skills Development – Applicants are required to either, provide learnerships to those previously disadvantaged individuals who have the necessary qualifications from tertiary institutions but are currently unemployed, and this is to allow them to get the necessary experience to be productive in the economy. Or, alternatively, Applicants can provide bursaries to the previously disadvantaged individuals to pursue studies at higher learning institutions that are applicable to the industry. This requirement will be finalized with successful tenderers during the contract stage.
Corporate Social Investment – Applicants are required and expected to spend one (1) percent of the awarded contract on CSI to advance social causes within the South African communities that are disadvantaged. Social Investment to be advanced will be finalized at the contract stage.
Eskom will apply a penalty of 1.5% of the Contract Value for failure to meet SDL&I obligations.
More information regarding the SDL&I requirements is contained in the Ancillary Services Agreement.
Disclaimer
NTCSA reserves the right to terminate or make changes to the pilot at any stage of the process, such as if the provider is found to be in violation of the Prevention and Combating of Corrupt Activities Act 12 of 2004 (PRECCA), the Prevention of Organised Crime Act 121 of 1998 (POCA), the Public Finance Management Act 1 of 1999 (PFMA), or the Constitution.
