Energy Central-News Article

News24

-- Fifteen companies will participate in a pilot project to trade electricity using the municipality's distribution infrastructure. -- The wheeling project should kick off in July and would allow the parties to sell and buy power from each other directly. -- This is one of a tranche of solutions rolled out by the City to help address load shedding. -- For climate change news and analysis, go toNews24 Climate Future. -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Fifteen companies, including Amazon's data services business in South Africa and property giant Redefine, will participate in a pilot project to trade electricity using the City of Cape Town and Eskom's grid infrastructure.

The announcement was made on Wednesday, following approval from the City's Mayoral Committee. Council is to give approval later this month, the city indicated in a statement.

The wheeling project - which involves electricity generated by an independent power producer at one point, to travel across the grid to the end consumer, or a business in this case - is set to kick off in July.

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Wheeling allows people to buy electricity from each other using existing grid infrastructure. The future is now, as Cape Town gears up for the first electron to be wheeled between our pilot project participants this July.

- Mayor Geordin Hill-Lewis

Last year, the city invited applications from both customers and electricity generators to participate in the programme. The journey has involved concluding wheeling agreements and working out billing systems.

"The city is getting on top of the complexity of wheeling, which requires new skills, regulatory and policy changes, billing development and bilateral agreements.

"Our programme will allow electricity to be wheeled over both the municipal and Eskom distribution networks in Cape Town," said Councillor Beverley van Reenen, Mayoral Committee Member for Energy.

"Sales will be governed by bilateral power purchase agreements 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," Van Reenen added.

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The city also sees wheeling as one of the ways to address energy shortages or load shedding. Other measures include the procurement of as much as 700MW of power from independent power producers, paying customers for selling excess power back to the grid and launching a programme to get customers to use electricity more efficiently.

As load shedding continues to cripple economic activity, companies are resorting to their own power solutions.

Redefine Properties relies on solar PV installations on its shopping malls and is currently installing solar panels costing R142.5 million, News24 previously reported. Its chief operating officer Leon Kok previously said that the capital costs of installing storage batteries does not justify the expenditure.

Amazon already relies on a 10MW solar plant in the Northern Cape to power its data centres - as part of its efforts to have all global operations powered by 100% renewables.

The full list of companies participating in Cape Town's wheeling project is as follows:

-- Amazon Data Service South Africa (Pty) Ltd -- Brinmar Private Energy Trading South Africa -- Distributed Power Africa (Pty) Ltd -- Energy Exchange of Southern Africa (Pty) Ltd -- Energy Partners Utilities (RF) (Pty) Ltd -- EnerJ Carbon Management -- Enpower Trading (Pty) Ltd -- Floating Solar (Pty) Ltd -- Make a Difference Ventures GP LLC -- NEURA Trading (Pty) Ltd -- Phofu Solar Plant (RF) (Pty) Ltd -- POWERX Proprietary Limited -- Redefine Properties Limited -- Solar Africa Energy (Pty) Ltd -- Swish Property Seven (Pty) Ltd These are not the only companies looking into wheeling to address energy requirements.

Mobile operators MTN and Vodacom are also working on their own wheeling projects - specifically to source power from renewable sources of energy to meet their commitments to reduce emissions.

MTN has recently issued a Request for Information (RFI) for a wheeling solution. The company is specifically looking to wheel electricity generated from renewable energy (such as solar, wind and hydro and that produce no emissions).

Apart from addressing the immediate priority of energy security, it will help save on carbon emissions, MTN SA's chief of sustainability and corporate affairs, Jacqui O'Sullivan, said in response to questions. The company has ambitions to achieve net zero emissions by 2040.

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The solution will also help limit the diesel burnt to power generators. Responding to a question on the potential cost savings from shifting from diesel, MTN explained that the average cost of electricity from the grid is approximately R2/kWh, and the average cost of diesel is R7/kWh. Over a 20-year period, the cost of renewable energy comes to R1/kWh.

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Vodacom also sees wheeling as a means to achieve its goal of having its power 100% sourced from renewable energy.

Vodacom first announced in October 2022 that it is working on a project with Eskom to allow its operations to source 100% of its energy needs from IPPs by 2025, a spokesperson said. "We said at the time that the success of the solution would not only provide Vodacom with renewable power but also provide a blueprint for other South African corporates to replicate and that this would allow more companies to add capacity to the grid to help solve the country's energy crisis," the spokesperson said.

Vodacom's sites are currently primarily supplied from the grid, coupled with batteries as a backup.

"Since 2020, Vodacom South Africa has spent over R4 billion in backup power solutions such as batteries and generators," the spokesperson said. During heightened load shedding levels, the company also relied on generators to keep customers connected. "In the past financial year, we spent an incremental R300 million on operating costs, mostly on diesel."

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