Having co-developed the virtual wheeling solution with Eskom and concluded our agreement, we estimate that we will move approximately 30% of Vodacom South Africa’s power demand onto renewable sources, says Sitho Mdlalose, CEO of Vodacom South Africa.
He added that this is a significant step towards the company’s renewable energy ambitions.
“We are really excited that we have the opportunity to contribute to the national grid, and truly hope that through sharing our understanding of virtual wheeling and engaging both government and private participants on this solution, similar actions can be taken by other businesses across the country.”
Mdlalose was speaking at an energy conference. Vodacom South Africa, Eskom, and the National Business Initiative (NBI) hosted energy industry stakeholders including government, and business stakeholders such as independent power producers (IPP), in a knowledge sharing session aimed at shifting the perceptions of power generation in South Africa.
This year has seen new strides being made towards a sustainable solution to the power crisis in South Africa. One of the most notable of these is the announcement of the first, historic virtual wheeling agreement signed by Eskom and Vodacom South Africa . After signing the agreement in August 2023, the partner organisations are committed to sharing insights into their key learnings and understandings of this innovative approach, in the hope that it will create a blueprint for other corporates looking to achieve their decarbonisation goals while positively contributing to the stability of South Africa’s electricity grid. This partnership sets the tone for new models of co-operation between business, governments, international organisations and civil society to deliver progress and scale towards sustainable economic growth.
The broad concept of wheeling is not new, having first been approved in South Africa in 2008. Traditional wheeling typically involves a one-to-one relationship between the IPP and a buyer, using the national grid to convey their energy. While traditional wheeling is fairly common globally, it has certain limitations for companies with complex operating environments. The virtual wheeling solution addresses these challenges primarily by incorporating smart metering, removing the need to amend the customer’s supply agreements, and extends wheeling to customers connected at low voltage. In addition, this mechanism supports the trade of renewable energy certificates that are utilised for decarbonisation efforts.
Monde Bala, Eskom’s Distribution Group Executive, says, “Virtual wheeling allows industrial and commercial customers connected to either Eskom or municipal networks to buy electricity directly from IPPs. This has a knock-on effect of increasing security of supply and reducing load shedding by unlocking investments in new generation capacity by IPPs at no cost to Eskom or the taxpayer. Virtual wheeling does not require changes to existing Electricity Supply Agreements (ESAs) and is not limited by municipalities that do not have wheeling frameworks. However, Eskom will only process the refund of an off-taker or municipality whose Eskom account is in good standing.”
NBI CEO, Shameela Soobramoney, explains the importance of virtual wheeling for sustainable energy solutions: “Virtual wheeling effectively enables the transmission of renewable energy across different parts of the grid in a practical and accessible way, making it not only a business imperative, but a pivotal component of the Just Energy Transition. As business leaders, and from a strategic corporate standpoint, the significance of virtual wheeling cannot be overstated as an indispensable lever in South Africa’s burgeoning renewable energy market.”
During the knowledge sharing session stakeholders from Vodacom, NBI, Eskom and the Minister of Electricity, Dr Kgosientsho Ramokgopa provided attendees with an overview of virtual wheeling and explained their vision from both the private sector and governmental perspectives, providing clarity on the mechanisms, policies, and rollout plan.
Following this, delegates engaged in a panel discussion highlighting and addressing the challenges and critical enablers of energy generation in South Africa. Discussion focused on the government, supply, and demand perspective of energy generation, ensuring clarity across the entire supply value chain.
The future of energy production in South Africa is looking bright with several parties from across industries having already shown commercial interest in the virtual wheeling solution enabled by Eskom and Vodacom subsidiary, Mezzanine. Vodacom, Eskom and the NBI all hope that more organisations will be able to utilise virtual wheeling, adding capacity to the grid without impacting Eskom’s balance sheet, while helping to reduce its greenhouse gas emissions, benefitting the South African economy and environment.