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Eskom evolving from traditional to virtual wheeling with Vodacom

29th September 2023

By: Cameron Mackay

Creamer Media Senior Online Writer

     

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State-owned power utility Eskom strategy development senior manager Mutenda Tshipala has noted that Eskom is evolving from the traditional electricity wheeling mechanism to virtual wheeling in collaboration with local telecommunications company Vodacom.

Speaking at RES4Africa Foundation’s virtual session on September 29 – titled ‘The South African Electricity Wheeling Landscape’ – he said the traditional wheeling method Eskom currently uses credits the accounts of Eskom customers.

Wheeling is a transaction between a private generator selling its generated energy to a buyer through a power purchase agreement (PPA).

This energy, however, needs to be exported over the Eskom electricity grid, as they are not located on the same site.

Wheeling also enables independent power producers (IPPs) to generate renewable energy where the resources are located and supply end-users in other locations.

Traditional wheeling is generally done by measuring what a generator produces and then loading this export onto the offtaker’s Eskom bill.

He pointed out that an amendment to the supply agreement must be signed to account for the wheeled energy on the bill.

Traditional wheeling has been in place since 2008 and is applicable to medium-voltage (MV) and high-voltage (HV) connected suppliers.

This mechanism came with inherent weaknesses, Tshipala said.

“One is that it doesn’t account for a scenario where we’ve got multiple generators supplying to a number of loads. It’s also currently limited to MV- and HV-connected suppliers, owing to limitations with how we use available technologies.

“It also doesn’t allow for a scenario that involves energy traders, as there’s interest in traders to assisting with wheeling. The current mechanism only accounts for the relationship between the IPP or supplier, the customer and the utility, and doesn’t consider that there could be traders coming into the market,” he added.

Further, he noted that the mechanism did not adequately deal with customers beyond municipal boundaries, as wheeling to an offtaker within a municipality was only limited to municipalities that had a wheeling framework in place.

NEW ESKOM POLICY
He explained that Eskom’s new policy of virtual wheeling was suitable for low-voltage (LV), as well as MV- and HV-connected suppliers.

Virtual wheeling enables using multiple generators supplying to multiple offtakers, implementing contracts with buyers such as traders or corporate entities.

It also required no amendments to an electricity supply agreement, as wheeling credit could be provided to the buyer as a refund, he added.

This virtual wheeling policy will also be supported by a “data hub” that will be implemented in collaboration with Vodacom.

“This will enable IPPs to wheel electricity to many customers and entities that are connected on the Eskom network and inputting municipal networks. An IPP could wheel to customers such as retailers in the Eskom municipal networks, including those that are connected on the MV network.”

He added that this mechanism provided wheeling opportunities to all entities, which he hoped could be extended to residential customers in the future.

How Vodacom and Eskom use the data hub, and other supporting technologies, will be crucial in the implementation of virtual wheeling, Tshipala noted.

“We won’t be crediting the customer’s account, but we’ll be making a financial payment to a corporate entity that has a relationship with an IPP.

“This will enable us to extend this wheeling concept to customers that are connected on the MV network, including customers in the municipal network.”

He also stressed that this mechanism would not have an impact on the finances of municipalities, as customers would continue paying their municipal accounts and the municipality would continue paying accounts to Eskom.

Eskom will then credit the corporate entity or developer, and this enables Eskom to enter into trading relationships with energy traders.

“Currently, we only enter into a relationship with IPPs in terms of connection and use-of-system agreements, and loads in terms of amendment of electricity supply agreements and amending those supply agreements.

“What virtual wheeling now will do is Eskom can enter into a relationship with a trader who's acting on behalf of the corporate entity, or the IPP, who’re acting on behalf of these millions and millions of customers who are interested in pursuing net-zero emission targets,” he said.

“The relationship is evolving from a single generator to a single customer dynamic, to a multiple generators to multiple customers dynamic. We will be contracting traders who’re acting on behalf of many customers and corporate entities,” he added.

APPLICATION PLATFORM
He also emphasised that Eskom, in partnership with Vodacom, had built an application platform.

“We’re now working on the settlement platform that comes with this. This gathers data from a range of sources, such as cell phone towers, and it inputs this into a data hub, which we refer to as the virtual wheeling platform.

“For IPPs, the data is sent to the data hub, the reconciliation is done. Once this is done, that information is used by Eskom to pay the relevant trader or IPP.”

Virtual wheeling will also mean that there are obligations for traders, such as aggregating data of customers from metering points, and providing this data to the data hub.

“Eskom’s obligation will be to take this data and aggregate it into terms of use, and calculate a wheeling agreement.

“Further, the municipality doesn’t have to invest in infrastructure if they pursue virtual wheeling, they can use the infrastructure that Vodacom and Eskom have developed. These have been developed as a public good for any entity in South Africa to use.”

He also stressed that virtual wheeling and the data hub would be able to provide relief to LV customers, and would make the administration of wheeling easier.

“If you want to remain in the traditional wheeling space, you’re welcome to do so. We also created a portfolio of wheeling, so one can still use traditional wheeling with a portfolio of power generators that wheel to a portfolio of loads,” he concluded.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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