Cape Town starts wheeling electricity for the first time in big move to end load shedding

The City of Cape Town’s wheeling pilot has kicked off, with private companies now supplying power to others using the city’s infrastructure.

Wheeling is a process where electricity is bought and sold between private parties, using the existing grid to transport power from where it is generated to end-users that can be long distances apart.

In theory, the process should provide greater access to renewable and independent energy, which should go a long way in helping businesses (and one day, residents) escape load shedding, while also pulling demand of Eskom’s generation arm.

According to Growthpoint Properties, it has become the first party to wheel renewable electricity in the city in collaboration with licenced electricity trader Etana Energy.

The two groups were selected to be part of the city’s six-month wheeling pilot project, which includes 15 wheeling participants representing 25 generators and 40 customers.

Through Etana, solar energy generated at Growthpoint’s The Constantia Village shopping centre in Constantia is being exported into Cape Town’s electricity grid for use at Growthpoint’s 36 Hans Strijdom office building in the Foreshore, the home of Investec and Ninety One.

A wheeling agreement between the city and Growthpoint was signed at the end of August and solar power from The Constantia Village was successfully injected into the city’s energy grid for the first time on Sunday, 10 September 2023.

“The pilot will lay the groundwork for future wheeling in Cape Town and enable businesses to use energy from rooftop solar panels across multiple locations, encouraging them to optimise solar capacity instead of limiting it to individual building use,” the group said.

Overall, Cape Town is planning to add up to one gigawatt (1,000MW) of independent power to end load shedding in the city over time.

“The exact mix may vary, but we expect wheeling to contribute up to 350MW to the grid in time,” it said.

Cape Town’s other “end load-shedding” plans include wheeling electricity, partnering with independent power producers, paying households and businesses ‘Cash for Power’ generated by solar PV, the ‘Power Heroes’ incentive scheme for households to reduce energy demand, solar PV farms, and further optimising of the Steenbras Hydropower plant.

The city said its wheeling pilot aims to test and validate the contracting framework and billing engine for full-scale implementation.

Virtual wheeling

While the Cape Town pilot and successful implementation by Growthpoint and Etana is a traditional wheeling project, Vodacom and Eskom have been working on a different kind of “virtual wheeling” project to achieve similar goals.

Traditional wheeling typically involves a one-to-one relationship between an IPP and a buyer using the national grid to convey their energy.

However, in Vodacom’s case, this arrangement is not possible due to  complexities associated with having over 15,000 distributed low-voltage sites across the country that are linked to 168 municipalities.

Virtual wheeling allows licensed third-party traders to contract with one or more IPPs for part or all of the IPPs’ energy generated into the Eskom grid.

The trader then effectively sells parts of its contracted energy from the IPPs to a basket of customers, with shorter off-take terms than the trader’s power purchase agreements (PPAs) with the IPPs.

In a virtual wheeling arrangement, the customer get its normal electricity supply bill as usual from the electricity distributor (Eskom or municipality), and separately gets a rebate (or excess bill) from the trader.

The municipal electricity distributor therefore experiences no reduction in its revenue stream.

Read: Vodacom signs major ‘virtual wheeling’ deal with Eskom – as its load shedding bill tops R4 billion