Wheeling electricity across the grid offers a solution to South Africa’s power crisis, so why is it not happening in the energy heartland? Andiswa Matikinca and Thabo Molelekwa investigate Wheeling is an opportunity for the uptake of renewable energy in Mpumalanga province as coal-fired power generation declines. Photo: Salam Habash / Unsplash Wheeling is a method of sharing electricity that offers a solution to some of the country’s grid constraints, and an opportunity for the uptake of renewable energy in Mpumalanga province as coal-fired power generation declines. Wheeling of electricity generated by third parties has been approved by state utility Eskom since 2008. It addresses the geographical limitations of Mpumalanga, which a #PowerTracker data investigation in early in 2023 showed has missed out on renewable energy despite the planned decommissioning of coal power stations based in the province. New research released in July by the South African Local Government Association (SALGA) indicates that the wheeling market is still in early stages and only four municipalities have some sort of operational wheeling system in place. None is based in Mpumalanga. “Mpumalanga has lots of grid capacity available to connect generators who can wheel their power to large energy users in other provinces of South Africa,” said Josh Dippenaar, project manager at Sustainable Energy Africa, one of SALGA’s partners. “Wheeling represents an opportunity to build power plants in areas where the local economic benefits of renewable energy are highest, and they can sell their electricity via the grid – ie ‘wheel the power’– to urban areas where the electricity can be consumed,” he said. Eskom: ‘Wheeling helps customers achieve renewable energy targets and facilitates private participation in the electricity supply industry to add additional generation capacity’ Wheeling of renewable energy from a plant in a part of the country where there are grid constraints to an end-user located in another area takes place via an existing distribution or transmission network. “This process usually involves electricity that is generated in more remote areas being transported to wherever the customer or offtaker is located,” said Wikus Kruger, director of the Power Futures Lab at the University of Cape Town’s Graduate School of Business. “It’s not like you have solar panels on the roof of the factory or even next to the factory. They will be quite far away.” Wheeling is a way of getting private investment into the sector, he added. “Companies will pay a fixed fee to Eskom for wheeling the power; it’s a fee that’s supposed to cover the cost of running and maintaining the grid.” The actual cost of power being generated gets paid to the renewable energy plant by the offtaker company. According to Eskom, wheeling is the delivery of energy over the grid. Customers enter into third-party bilateral transactions where they buy power from a private generator. This energy is delivered by Eskom over the grid. “More and more customers are looking into entering into private power purchase agreements (PPAs)… for reasons such as [meeting] renewable energy targets and creating additional generation capacity to alleviate load-shedding,” said Eskom’s media desk in response to questions from Oxpeckers. “Wheeling helps customers achieve renewable energy targets and facilitates private participation in the electricity supply industry to add additional generation capacity.” Kruger said a problem with wheeling is that it’s only possible within the municipal space, and it’s challenging because the rules and regulations need to be set up by the municipalities themselves. He added that a potential solution being worked on is called virtual wheeling. Virtual wheeling aims to reduce the barriers of the traditional wheeling method, which only allows for bilateral trade agreements between generators and buyers. Virtual wheeling allows one or more generators to transact with multiple offtakers, giving the customer the option of significantly reducing the term of a PPA as compared to traditional one-to-one wheeling arrangements, according to energy analysts Linsey Dyer and Chris Yelland. On August 30 telecommunications giant Vodacom and Eskom announced an historic virtual wheeling agreement, enabling Vodacom to secure renewable energy from independent power producers on the same terms and conditions that underpin its agreement with Eskom. Vodacom South Africa CEO Sitho Mdlalose reportedly said the initial phase of the deal would move about 30% of Vodacom South Africa’s power demand onto renewable sources. “Think of it like purchasing renewable energy certificates,” he said.