The indication by State-owned utility Eskom that virtual wheeling is not yet available to licensed electricity traders is “surprising and disappointing”, EE Business Intelligence MD Chris Yelland tells Engineering News.

The company held a webinar about virtual wheeling on June 5, during which Eskom Distribution strategy development senior manager Mutenda Tshipala made this announcement.

“Currently there is still some engagements with the National Energy Regulator of South Africa (Nersa) on how the trading rules will look, so, at this instance, we are not dealing with traders in this virtual wheeling setup at all,” Tshipala said, adding that these issues were still being resolved.

He pointed out that Eskom was not opposed to these traders, but rather, was asking for a rules-based approach to manage this.

Tshipala expressed his personal view that the country had been “reckless” by not having these rules, as was done in countries like the UK.

Speaking from the company’s perspective as a trader, Discovery Green CEO Andre Nepgen concurred that the news was surprising and emphasised that if a rules-based approach was the only reason for the delay, this should be undertaken expeditiously. 

“This announcement by Eskom Distribution today appears to have taken licensed electricity traders quite by surprise. For example, only a couple of weeks ago, the Minister of Energy and Electricity and executives from Discovery Green and Sasol announced with great fanfare and media attention the launch of Ampli, an initiative to supply small and medium-sized enterprises embedded in Eskom and municipal networks with green energy using the Virtual Wheeling mechanism,” Yelland tells the publication.  

He posits that the announcement seems to be aligned with Eskom’s stated intention about a year ago of challenging the award of trading licences by Nersa in court.

“This announcement by Eskom Distribution significantly pulls the rug from under the Virtual Wheeling mechanism, and from traders wanting to wheel green electricity to the aggregated demand of large number of small, medium-sized and larger enterprises,” Yelland emphasises.

Cresco specialist consultant Shirley Salvoldi said some of the key questions raised by virtual wheeling include whether Eskom will allow contracting with a trader as a counterparty, which the entity has said will not happen while it undertakes discussions with Nersa. 

“I do believe that there’s such a great benefit to allow traders to participate or to use this as a product,” she acclaimed, noting that it was unclear, however, how this would work if it did not entail working with traders of corporate entities such as Vodacom.  

“Nersa does state where the buyer is a trader or a corporate entity and is not an offtaker, the network service provider may contract with the trader or corporate entity. So there’s acknowledgment even in these Nersa rules about contracting with traders,” Salvodi also mentioned.

The webinar explored the risk and limitations around virtual wheeling, with Eskom’s newly launched Virtual Wheeling Platform outlined as a product and service offering to offtakers connected to either Eskom or municipal networks and supplied at high, medium or low voltage.

It was co-developed by Eskom and Vodacom subsidiary Mezzanine, aimed at addressing the complexities of delivering renewable energy to Vodacom’s network of over 15 000 low-voltage sites across 168 municipalities, with the mobile operator seeking to shift to greener energy sources for these.

Following successful piloting over the last year, it was launched as an available product.

Presenting in the webinar, Tshipala explained that the platform was a new mechanism that allowed aggregators to transact on behalf of multiple customers (Eskom or municipal-connected), with a single refund processed to one account. End-users would still pay their utility bills.

This means that existing contractual, metering and billing arrangements remain in place with Eskom or municipal distributors without change, and allows a customer to obtain rebates for energy purchased from a renewable-energy generator or trader.

Speakers highlighted the opportunities presented by virtual wheeling, including that it had unlocked the municipality segment, provided administrative simplicity and would allow smaller offtakers to participate.

Issues and considerations include credit risks, how to manage municipalities that are in bad standing and a heavy reliance on data platforms and integration with Eskom’s systems.