Wheeling is often discussed as the ultimate solution for South Africa’s energy challenges, yet the practical reality of moving power from point A to point B involves a complex web of regulatory frameworks.
While the core concept – transporting electricity across existing infrastructure – remains the same, the rules of engagement shift significantly depending on whether you are connected to the Eskom national grid or a local municipal network.
The Eskom framework: National standards and virtual shifts
For most large-scale renewable projects, Eskom’s transmission and distribution networks act as the primary highway. Wheeling on the national grid is governed by established distribution connection and use of system agreements (DCUOSA), which ensure Independent Power Producers (IPPs) can utilise the grid for a transparent fee that covers infrastructure maintenance.
The landscape is currently maturing with the establishment of the National Transmission Company South Africa (NTCSA) and the rollout of Virtual Wheeling, which differs from traditional wheeling in a number of ways:
- Traditional wheeling: This model typically involves a “one-to-one” or “one-to-many” relationship where energy is moved from a specific generator to a specific customer. It requires complex, individual amendments to supply agreements at every connection point and often involves manual reconciliation between different municipal or Eskom accounts.
- Virtual wheeling: This modern mechanism simplifies the process by decoupling the energy flow from the financial transaction. It aggregates Time-of-Use (TOU) data across multiple sites, allowing a corporate to receive a single, consolidated credit on their bill. By removing the need to renegotiate individual supply contracts for every branch or factory, virtual wheeling significantly reduces administrative complexity and opens the door for companies with distributed footprints to access renewable energy at scale.
The municipal landscape: Localised nuance
When a business connects to a municipal grid rather than directly to Eskom, a different set of rules applies. Municipalities act as intermediaries, and their wheeling policies vary significantly across the country.
The primary hurdle has historically been ‘revenue neutrality’. Municipalities rely on electricity mark-ups to fund local services, and wheeling can impact this income stream. To address this, forward-thinking metros like the City of Cape Town and George Municipality have pioneered localised frameworks. These allow for third-party access while ensuring the municipality is compensated through the WEPS credit methodology and incremental administration fees. The key for businesses here is ensuring their municipality has an approved wheeling tariff and wheeling policy in place.
The path to harmonisation
As South Africa moves towards a more liberalised market, the goal is to harmonise the rules between Eskom and various municipalities. This alignment is essential for creating a predictable environment where businesses can invest in long-term renewable strategies with confidence.
At EXSA, we specialise in navigating these varying rule sets, acting as the bridge between national frameworks and local requirements to ensure a seamless, compliant journey to clean power.
Ready to move your business onto a more sustainable grid? Contact EXSA today to ensure your energy strategy is both compliant and optimised.