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Future-proofing energy in municipalities – electricity wheeling and trading explained

Home Infrastructure Energy – Power Generation Future-proofing energy in municipalities - electricity wheeling and trading explained

THE South African landscape and electricity supply industry is changing rapidly, and as the market evolves, the incentive for municipalities and businesses to procure their own power has become more evident.  Decarbonisation, owing to climate change, is a key motivation for a transition to green energy but as electricity costs accelerate and loadshedding increases, municipalities are also forced to ‘future-proof’ their strategies in order to provide access to affordable, sustainable energy for all.

Enpower Trading, a NERSA-licensed electricity trader, hosted a symposium in Johannesburg in June this year in an effort to collaborate with municipalities and businesses alike. The aim was to accelerate the enablement of energy wheeling and trading as a municipal service, including ways in which the private sector can further support the transition.

Speaking at the Symposium, James Beatty, CEO of Enpower Trading, an energy trader with over 16 years of industry experience, explained how the company set out to transform the South African electricity supply industry through wheeling, which is the transportation of electricity on behalf of independent power producers (IPPs) to customers, business and government. This business model is premised on ensuring municipalities operating on the local distribution grids, retain their profits (revenue surplus-neutral) while providing customers with cheaper and cleaner electricity.

The benefits of wheeling and trading for municipalities

“Trading will help municipalities to meet a share of their customers’ energy needs from renewable sources and generation projects located within the municipal grid,” explained Beatty, “and more importantly, a trading solution ensures that a municipality does not lose its customers but rather enables them to purchase cheaper and cleaner electricity – ensuring the municipal income from these customers is retained.”  Wheeling and trading is also a means to mitigate “off-grid flight” which threatens the municipality’s electricity income, traditionally accounting for more than half of municipal revenues.

Furthermore, through this model, municipalities can increase their energy autonomy and reduce their dependence on the national utility as the sole supplier of electricity, without exposure to complex generation construction or onerous purchase contracting. Additionally, this provides a bankable solution for generation located within the municipal and Eskom network grids, allowing municipalities to increase their share of renewable energy and reduce their reliance on Eskom, resulting in a sustainable municipal power mix.

A pilot project in George Municipality

George Municipality already has a successful pilot project up and running, with Enpower Trading wheeling electricity directly through the municipal grid to four of its own low voltage customers. The project involves the connected customers and one independent power producer (SolarAfrica Energy) and is based on a single 1.8 MWp solar project installed on the premises.

“Our goal here is to further explore available energy sources, guiding them towards the municipal grid, while at the same time lowering the cost of electricity in our region,” said Bongani Mandla, George Municipality’s electrotechnical director and speaker at the symposium. “And with all the privately generated energy coming into the grid, we hope to reduce loadshedding by lessening our reliance on Eskom.”

In addition to mitigating loadshedding over time, Beatty believes that energy wheeling and trading will assist in driving economic growth and enable community upliftment to address energy poverty by ensuring rate-paying customers remain connected to the grid.  Beatty concluded that “inclusive economic growth is the single most effective means of reducing poverty and boosting prosperity. Yet most economic activity is impossible without adequate, reliable, and competitively priced, modern energy.”

The event attracted key representatives from the energy sector, businesses, and local municipalities. The second of a series of symposia, which is to be held across the country, aims to share knowledge and insight amongst key role-players in the electricity distribution environment. Collectively, this pursuit of innovative energy supply solutions will transform the future of energy in South Africa.

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