Private sector businesses have recently shared their experiences in achieving net-zero carbon emissions. These journeys not only help them meet their environmental, social, and governance (ESG) goals but also contribute to addressing South Africa’s current electricity crisis.
Empowering South Africa Innovative Systems to Mitigate Eskom Load Shedding
Electricity Sector Reform
These companies are leveraging upcoming changes in the structure and legislation governing South Africa’s electricity supply industry (ESI).
The country is moving towards a more open, diversified, and competitive electricity generation sector, featuring a state-owned independent transmission system operator (ISO) and an independent electricity market operator (IMO).
Transition from Single Buyer Model
Historically, the South African ESI operated under a “single buyer” model, where Eskom was the sole generator and distributor of electricity.
However, this model faced challenges due to deteriorating power station performance and slow, bureaucratic processes in planning and procurement.
Shift Towards Wheeling Arrangements
In response to these challenges, the single-buyer model is evolving to incorporate wheeling arrangements. These arrangements involve large customers (off-takers) contracting renewable energy from independent power producers (IPPs) while paying a use-of-system fee to the grid operator, Eskom.
Introduction of Third-Party Electricity Traders
To address limitations in one-to-one wheeling arrangements, South Africa has recognized the role of private-sector third-party electricity traders. These traders contract renewable energy from generators and supply it to a diverse group of off-takers, reducing risk and allowing greater customer choice.
Virtual Wheeling for Broader Access
To make wheeling and trading accessible to a wider range of enterprises, including those embedded in municipal distribution networks, a concept known as “virtual wheeling” is being developed.
This approach streamlines the process, enabling customers to contract renewable energy without changing their existing electricity supply arrangements.
Notable Players in Virtual Wheeling
Companies like Vodacom and Discovery have played key roles in developing and implementing the virtual wheeling framework. Vodacom, with its extensive network of cellular towers, sought to reduce its carbon footprint and electricity costs, while Discovery realized the potential to address its Scope 2 emissions.
Benefits of Virtual Wheeling
Virtual wheeling offers affordability, renewable energy options, price predictability, support for national electricity needs, and a seamless onboarding process. It expands access to renewable energy, reduces carbon footprints, and brings new, clean generation capacity to the grid.
Benefits for a Broader Range of Customers
Virtual wheeling has the potential to provide electricity supply options and cost reduction not only to large corporates but also to small, medium, and micro enterprises (SMMEs) and residential customers in municipalities in good standing with Eskom.
Benefits for Key Stakeholders
Eskom benefits from increased low-carbon electricity supply, reducing the reliance on high-cost emergency generation. Municipalities maintain revenue streams, ensuring continued service delivery. Virtual wheeling incentivizes payment of arrear debts and electricity bills.
By leveraging the power of markets and private sector innovation, these companies are driving more inclusive solutions that benefit all energy stakeholders, leading to a more competitive and diversified electricity generation sector in South Africa. This, in turn, increases electricity supply and reduces load shedding for the benefit of the entire nation.