Eskom has made an announcement that it is officially exploring a “virtual wheeling” mechanism which is set to facilitate greater electricity generation investment by the private sector and municipalities in South Africa.
What wheeling is, is that it is a transaction between a private generator selling energy to a buyer through a power purchase agreement where this energy needs to be exported over the Eskom grid to another location. For instance, a data centre located in Johannesburg could draw on energy produced by a solar farm in the Northern Cape and “wheeled” over Eskom infrastructure.
According to senior advisor for electricity pricing at Eskom Onicah Rantwane, in virtual wheeling, data from private energy generators is aggregated and a refund provided for the wheeled energy on a consolidated basis.
A buyer of grid energy in this scenario, is an Eskom customer purchasing a mix of energy, some produced by the state-owned utility and some from the third-party generator. Typically, traditional wheeling is done by measuring what a generator produces and then loading this export on the buyer’s Eskom bill.
According to Rantwane, there are a number of limitations associated with traditional wheeling:
- Amending the supply agreement must be signed to account for the wheeled energy on the buyer’s bill.
- The traditional model does not cater for connecting multiple generators to many buyers and is limited to medium-voltage and high-voltage supplies.
- The traditional framework does not cater for small buyers of energy or traders and aggregators and it does not adequately deal with customers beyond municipal boundaries.
- Wheeling to an “offtaker”, or buyer, within a municipality is only limited to local councils that have wheeling frameworks in place.
Virtual wheeling is set to address the limitations of traditional wheeling and will apply when one or more generators is wheeling to many small buyers and generators, Rantwana said at an Energy Exchange webinar hosted by energy expert Chris Yelland on Thursday.
Eskom has not yet revealed the exact date for implementation, even though the plan to introduce virtual wheeling is well advanced, she said.
