The Western Cape Government’s website lists the definition of electricity wheeling (wheeling), as the act of transporting electricity from a generator to a remotely located end-user through the use of an existing distribution or transmission system. It adds that this may also be across multiple different distribution networks, such as through the national utility company, Eskom, to a municipality.
They add that in practice, this does not necessarily mean that the exact electrons entering the transmission network from the generator will be transported to the end-user. Wheeling frameworks essentially guide the balancing of energy from the generator’s production with the end-user consumption through a financial transaction and also includes overcoming system losses.
Electricity wheeling under private sector bilateral agreements can help unlock significant electricity generation capacity in the C&I solar sector in cases where a high energy consumer, such as a large data center or factory, may not have sufficient space to install enough solar panels on their premises but can enter into an agreement with a generator located in an area that can accommodate the desired electricity generation capacity. The utility company or the municipality that operates the transmission infrastructure then stands to benefit from levying a wheeling charge.
The City of Cape, which is located in the Western Cape Province, has just announced that its electricity wheeling pilot has been given the greenlight to proceed. Cape Town Mayor Geordin Hill-Lewis has announced that 15 commercial electricity suppliers will start wheeling electricity through Cape Town’s grid following City Council approval later this month. The City’s Mayoral Committee this week gave the greenlight to the authorization for third parties to start selling electricity using Cape Town’s grid infrastructure. Electricity wheeling is one way to help address the country’s energy shortages, and Cape Town is leading the way nationally with a unique wheeling pilot project which will culminate in the full-scale implementation of wheeling in the city by the end of the year.
“Wheeling allows people to buy electricity from each other using existing grid infrastructure. The future is now, as Cape Town gears up for the first electron to be wheeled between our pilot project participants this July. This is the business end of our pilot, following the development of the billing engine and the completion of wheeling agreements. Cape Town’s electricity landscape is rapidly liberalising off the back of our end load-shedding plans, with 700MW of independent power under procurement, innovative Cash for Power, and Power Heroes programmes, and now the sale of electricity wheeled between market participants,” said Mayor Hill-Lewis.
Last year, the City invited applications to participate in the wheeling pilot with fifteen participants (representing 25 generators and 40 customers) now confirmed and about to start wheeling.
“The City is getting on top of the complexity of wheeling, which requires new skills, regulatory and policy changes, billing development and bilateral agreements. Our programme will allow electricity to be wheeled over both the municipal and Eskom distribution networks in Cape Town. Sales will be governed by bilateral power purchase agreements within a market environment, as opposed to a regulated environment, as the price of the energy is set between the parties and not by the City, Eskom, or the National Energy Regulator of South Africa (NERSA),” said Councillor Beverley van Reenen, Mayoral Committee Member for Energy.
Cape Town also already has the enabling legislative framework in place for wheeling, with the City’s Electricity Supply By-Law allowing for the retail wheeling of electricity through the network. Wheeling will take place on 11kV and higher voltages.
The 15 wheeling pilot participants which have submitted valid applications to generate and sell power are:
- Amazon Data Service South Africa (Pty) Ltd
- Brinmar Private Energy Trading South Africa
- Distributed Power Africa (Pty) Ltd
- Energy Exchange of Southern Africa (Pty) Ltd
- Energy Partners Utilities (RF) (Pty) Ltd
- EnerJ Carbon Management
- Enpower Trading (Pty) Ltd
- Floating Solar (Pty) Ltd
- Make a Difference Ventures GP LLC.
- NEURA Trading (Pty) Ltd
- Phofu Solar Plant (RF) (Pty) Ltd
- POWERX Proprietary Limited
- Redefine Properties Limited
- Solar Africa Energy (Pty) Ltd
- Swish Property Seven (Pty) Ltd
It’s great to see these developments that will give a boost to the C&I solar sector, especially for space constrained sites that host high energy consumers. It is also a welcome development for some sensitive heritage sites or protected sites where aesthetically they may not want to look like a shopping mall carpark with arrays of solar panels, but can now benefit from solar generation from a more suitable location through a wheeling partnership agreement and not disturb their current ecosystem. These types of sites can now also get involved in the solar PV ecosystem via wheeling.
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