Electricity wheeling could play vital role in City’s electricity future

Electricity wheeling is one way to help address the country's energy shortages and the City too has been running a pilot project on wheeling to see how it could be practically implemented in its operations. The City is making steady progress with the plans of protecting residents from the first four stages of Eskom's load-shedding and commenced with its wheeling trial for commercial and industrial users, earlier this year.

Mayoral Committee Member for Energy, Councillor Beverley van Reenen, delivered the keynote address at the 2nd Annual Electricity Wheeling Conference held in Cape Town. The conference brought together key role players in the public and private sector where viable alternatives to enhance electricity delivery to load centres across the country were discussed.

'Wheeling has multiple benefits for our city as it will allow residents to procure electricity independently from the City and makes use of existing infrastructure. The City has taken it upon itself to be a leader in this space and is moving ahead with speed in our plans of ending load-shedding in our metro over time.

'The City is currently busy testing its Wheeling framework with a limited number of external participants via our Wheeling Pilot project. The pilot is scheduled to be completed by towards the end of this year.

-- Wheeling is very complex and requires new skills, regulatory and policy changes, billing development and bilateral agreements -- The market is cautiously ready to participate -- The City is very close to Wheeling the first electron Other initiatives

'We are also nearing the award stage of the 200 MW embedded energy tender to procure electricity from Independent Power Producers and bring new energy generation onto the grid. One of the City's latest initiatives is our largest power procurement tender, which will see the City approach the open market for around 500 MW of dispatchable power. We are on track to go to market.

'Besides bringing more renewable energy sources into our grid, the aim is to build a more affordable, reliable and resilient power supply for all our residents and businesses. As we forge ahead with this mission over the next three years, we look forward to the ongoing discussions with key role players and to seeking more solutions,' said the City's Mayoral Committee Member for Energy, Councillor Beverley van Reenen.

What is electricity wheeling?

Wheeling refers to the financial transactions representing the transportation of third party electrical energy (kWh) over the municipal/Eskom distribution network. It allows a third party supplier to sell this electrical energy to a customer at their point of supply. The sale is governed by a bilateral power purchase agreement (PPA) which exists within a market environment, as opposed to a regulated environment, as the price of the energy is set between the parties and not by the City/Eskom or the National Energy Regulator of South Africa (NERSA).

How will it work?

One of the City's Electricity Supply By-Laws, already allows for the retail wheeling of electricity through our network by a licensed third party electricity supplier to customers within the City's supply areas. Our wheeling will take place on 11kV and higher electricity lines. We are envisioning that a future licensed third party power supplier would be part of an electricity retail market, which would allow the trading of electricity at prices set by either a competitive bidding process or by means of bilateral power purchase agreements (PPAs). Wheeling by traders using PPAs is a precursor to establishing such an electricity retail market.