Regulating Distributed Generation: From Policy to Practice
Distributed generation is growing rapidly across many electricity systems, bringing new opportunities alongside new regulatory challenges. In this edition of RAP Field Trips, RAP partnered with GET.transform to explore how regulators are responding to this transition, drawing on practical experiences from Eswatini, Kenya and Lesotho.
The webinar brought together regulators, utilities and technical experts to share practical lessons on developing regulatory frameworks, designing tariffs, managing grid integration and supporting the safe growth of distributed generation.
The key questions explored
How can regulators support distributed generation while maintaining a reliable electricity system?
The discussion opened with an overview of the rapid growth of rooftop solar across Africa and the opportunities it presents. Speakers highlighted how distributed generation is helping businesses reduce diesel costs, improve energy security and attract private investment.
At the same time, they stressed that rapid deployment also creates new regulatory challenges. Without appropriate technical standards, clear procedures and reliable data, regulators may struggle to understand what is being connected to the grid or how it affects system planning. As highlighted during the webinar, “you cannot manage what you do not see.”
Why is digitalisation becoming increasingly important?
Digital permitting was presented as much more than an administrative improvement. A shared online platform can reduce duplicate applications, improve coordination between regulators and utilities, allow applicants to track progress and shorten approval times.
It also creates something equally valuable: reliable data. A central database of distributed generation projects helps regulators understand where systems are being installed, how much capacity exists and how the market is evolving, leading to better planning and more informed regulatory decisions.
How should exported electricity be compensated?
The webinar highlighted that there is no one-size-fits-all approach to compensating customers for the electricity they export to the grid. Instead, the right mechanism depends on the objectives of the electricity system, the financial position of utilities and a clear understanding of the costs and benefits of distributed generation.
Speakers explained why many countries are moving away from one-to-one net metering towards net billing. Net billing allows energy, network and fixed costs to be considered separately, making it easier to recover essential system costs while still providing an incentive for customers to invest in rooftop solar. Across the examples shared, one principle remained consistent: compensation mechanisms should be informed by cost-of-service and avoided-cost studies, rather than assumptions or political pressures.
What capacity is needed for successful implementation?
Effective regulation depends not only on good policies, but also on the institutions and people responsible for implementing them. Throughout the webinar, speakers emphasised that successful distributed generation frameworks require coordination across government, regulators, utilities, industry and consumers.
One of the strongest messages was that regulations should not be seen as documents owned by regulators alone. As one of the speakers explained, they are industry documents that require shared ownership and collaboration. Building technical expertise, supporting qualified installers, strengthening institutional capacity and communicating clearly with stakeholders are all essential to turning regulations into practical outcomes.
What does a good regulatory framework look like?
A strong regulatory framework provides certainty for everyone involved, from customers and installers to utilities. Rather than focusing only on rules, speakers emphasised the importance of defining responsibilities, establishing transparent approval processes and making compliance straightforward.
Drawing on Eswatini’s experience, the webinar showed that moving from informal practices to structured by-laws, permitting procedures and clear system thresholds can reduce uncertainty while creating a more predictable environment for investment and implementation.
Why do technical standards matter as much as tariffs?
While tariff design often attracts the most attention, the webinar highlighted that technical regulation is equally important for the successful integration of distributed generation. Clear technical standards help ensure that systems are connected safely, protect network reliability and give both customers and utilities confidence in the connection process.
Speakers highlighted the importance of defining system size thresholds, interconnection requirements, hosting capacity assessments, bidirectional metering and application timelines. These technical requirements provide consistency as the market grows and help avoid costly disputes or unsafe installations. The message was clear: good tariffs alone cannot deliver successful distributed generation without a strong technical foundation.
How can regulation remain fair for all consumers?
As distributed generation grows, regulators must balance encouraging investment with ensuring that electricity remains affordable for everyone. The webinar highlighted the importance of designing tariffs that fairly allocate network costs, particularly when customers with rooftop solar continue to rely on the grid for backup supply and other services.
Speakers also reflected on the risk of unintended cross-subsidies, where customers who cannot afford to install solar end up paying a greater share of network costs. Addressing these challenges requires careful tariff design, evidence-based cost studies and open engagement with stakeholders. The discussion also recognised that electricity pricing is often politically sensitive, making reforms more difficult even when there is a strong technical case for change.
How are utilities adapting?
One of the most encouraging themes of the webinar was the changing role of utilities. While distributed generation was once widely viewed as a threat to utility revenues, speakers suggested that many utilities are now beginning to see it as an opportunity to improve system performance and expand customer services.
Rather than resisting the transition, utilities are increasingly exploring how distributed energy resources can support demand-side management, virtual power plants, digitalisation and more efficient network planning. As one speaker observed, the market is likely to continue growing regardless of whether regulations are in place. The role of regulators and utilities is therefore to guide that growth, ensuring it delivers benefits for customers while maintaining a reliable and financially sustainable electricity system.
Questions from participants
The audience raised several practical questions that extended the discussion.
One question focused on what reforms could accelerate distributed generation and net metering across African countries, including whether tax incentives should play a greater role. Speakers emphasised that while incentives can help, establishing clear regulatory frameworks, technical requirements and compensation mechanisms is often the more immediate priority.
Participants also asked about the financial and technical impact of distributed generation on utilities. The panel highlighted the importance of joint studies between regulators and utilities to understand revenue impacts, avoided costs, operational requirements and network implications before determining appropriate tariffs.
Another question explored the distinction between net metering and net billing, prompting further discussion on how different compensation mechanisms affect both customers and utilities.
Speakers
- Bhoomika Tiwari, Adviser for Regulation and Market Development, GET.transform
- Monti Ntlopo, Manager, Technical Regulation, Lesotho Electricity and Water Authority
- Ncamiso Nkambule, Project Lead for Embedded Generation, Eswatini Energy Regulatory Authority
- Tanaka Shumba-Mukudu, Project Manager, Sustainable Energy Africa
- Dalton Lagat, Kenya Power and Lighting Company