Electricity behemoth, Eskom, is on the cusp of launching a groundbreaking solution. Meet “virtual wheeling,” the game-changer poised to amplify our electricity supply and likely decrease those pesky bills.
Understanding “Virtual Wheeling”
Let’s break it down. Virtual wheeling is set to grant industrial and commercial bigwigs – already part of Eskom and municipal circuits – a ticket into the ever-expanding network of power traders under the National Energy Regulator of South Africa (Nersa).
According to energy connoisseurs, Linsey Dyer and Chris Yellend, there’s a major revamp on the horizon. They remark, “Electricity pricing is expected to become more rational and market-driven.” Not just that, they anticipate a diverse range leading to a consistent and substantial electricity flow.
The Current Situation
Traditionally, South Africa’s “wheeling” is quite linear. It’s a clear-cut transaction: An independent power producer (IPP) supplies the Eskom grid, and a separate customer receives it elsewhere on the same grid. Eskom then tallies charges for system usage and credits the recipient accordingly.
Yet, these one-to-one wheeling contracts are often a whopping 20 years long. The experts weigh in, stating, “Such long tenures can be a significant burden for the receiver, often dampening enthusiasm for these agreements.”
And there’s another hiccup. In the past, it’s been nearly impossible to wheel into municipal distribution channels, primarily due to their absence of adequate systems and tariffs.
What Does “Virtual” Bring to the Table?
Onicah Rantwane, Eskom’s chief advisor on electricity pricing, shared some insights during an EE Business Intelligence gathering. She detailed that with virtual wheeling, licensed traders could enter into contracts with various IPPs. These traders can then distribute bits of this energy to an assortment of customers.
“This approach enables many-to-many wheeling transactions, a vast improvement over the limited one-to-one wheeling setup of the past,” the experts expound.
But what does this mean for you?
- You’ll receive your usual electricity bill.
- Traders will give you a separate rebate.
- Your local electricity distributor remains unaffected in its earnings.
- There’s no need to tinker with contracts or systems, though traders will install a time-of-use (TOU) meter at your location.
- Overall, the virtual wheeling method detaches from the usual billing operations, simplifying electricity transactions.
Let’s Talk Advantages
Virtual wheeling promises a bevy of benefits:
- Shielding customers from unexpected Eskom price hikes by utilizing cost-effective, renewable energy.
- Offering clients more flexibility in power purchase agreement (PPA) durations.
- Boosting security in electricity supply and potentially lessening load shedding episodes due to energy shortages.
But Dyer and Yellend caution, “While virtual wheeling addresses energy shortages, it doesn’t change the risk linked to the distribution of electricity, since this still rests with Eskom and municipal distributors.”
The Bottom Line
Eskom’s current power supply isn’t meeting the nation’s demands, hence the frequent load shedding. Apart from the Medupi and Kusile plants, no new capacity is in the pipeline from Eskom.
The experts elucidate, “By 2033, South Africa will likely need around 60 GW of new renewable energy. This is where the private sector comes into play, especially given the burgeoning electric vehicle and hydrogen markets.”
“In a restructured market characterized by efficiency and transparency, it’s supply-demand dynamics that will set prices. Such a market recognizes and values the integration of renewable energy.”
In essence, through energy resource pooling and reserve sharing, we’re looking at a future of enhanced power stability and reinforced security of supply.