AFTER running a successful pilot project, Eskom is enabling more energy producers and users to connect via energy traders and a digital platform. An introduction to the principles of virtual wheeling published on Eskom Distribution’s website, explains how a virtual wheeling platform brings together the infrastructure, financial incentives and governance framework required to enable private sector investment in new energy generation capacity in South Africa.
Traditional third-party wheeling is an existing mechanism that allows private energy producers to sell energy to buyers using Eskom’s transmission and distribution networks. The current energy crisis in South Africa necessitates urgent short- and medium-term interventions including the scale-up of renewable energy generation.
Accordingly, Eskom is supporting wheeling in the following two ways:
- Expanding traditional third-party wheeling to enable smaller buyers of energy with a distributed off-taker base including within municipalities (most are low- to medium-voltage users and therefore more challenging to manage administratively) to benefit from purchasing energy from IPPs or traders through an Eskom Virtual Wheeling mechanism.
- Accommodating traditional third-party wheeling where a customer can procure energy from an IPP and this wheeled energy is accounted for on the bill through a credit mechanism for the energy not supplied but delivered by Eskom.
Virtual Wheeling is therefore a new digital concept that accelerates access to alternative and additional energy sources, helping to reduce the current 8-10 GW gap in supply. This will contribute to the Presidency’s Energy Action Plan under NECOM in achieving its stated objectives.
The key value that the virtual wheeling platform (VWP) unlocks for Eskom is the ability to aggregate time of use (TOU) energy generation and consumption data (kWh) across multiple distributed buyer estates for the purpose of calculating the monthly Eskom wheeled energy refund payable to the buyer.
With respect to IPPs, traders and buyers, the VWP enables access to wheeling to low-medium energy buyers and off-takers with a distributed consumption base – a significant portion of the commercial enterprise and consumer market segments in South Africa.
Virtual wheeling charges
Virtual wheeling charges are standard tariff charges raised to all parties that use the grid. The use-of-system charges are unbundled tariff structures and rates that recover the costs associated with the delivery of energy and making capacity available on an electricity network. These are payable by generators and load customers for all wheeling/delivery of energy. In addition, connection charges are raised and are recovered upfront for connection costs not recovered through use-of-system charges.
Eskom points out that there is a misconception that wheeling charges are additional charges, which is not the case, since all customers whether buying from Eskom or from private generators will pay the same “wheeling charges” whether supplied by Eskom or through bilateral trade.
The only additional charge is the administration charge to facilitate the wheeling transaction.
A wheeling modelling tool and a schedule of standard price per tariff are available on the Eskom website, as well as various other relevant costing schedules.
