South Africa’s electricity market is shifting away from coal dependence toward consumer choice, driven by renewable power additions and the enablement of energy wheeling. SOLA Group’s managing director Katherine Persson spoke to ITWeb about the country’s energy setting, noting that the days of Eskom producing all the electricity for the nation are effectively over.
Current stability and future gaps
While the energy system is stable at the moment, Persson said the long-term sustainability of this status depends on decommissioning old coal plants and the speed at which new renewable projects come online. She added that a significant amount of new generation is already ready and waiting to begin construction over the next three to five years.
South Africa’s grid currently has about 55 gigawatts of generation capacity, with roughly 20 gigawatts of registered projects mostly focused on renewables. There is about R60 billion invested into renewable energy projects in the last year alone. SOLA Group is currently building a 300MW solar project in the Free State, which covers an area of about five square kilometres.
It is becoming increasingly difficult to find a place to inject new generation into the existing network because the national transmission system has seen limited investment over the past few decades. The separation of Eskom’s transmission network is now underway, with the National Transmission Company South Africa having been formed to work with the private sector on building new infrastructure.
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Wheeling and the path to a wholesale market
A key part of this evolution has been the formalization of electricity wheeling, which allows for the independent production of power in one location, added to Eskom’s network, and consumed by a third party elsewhere. Gazetted in 2021, amendments to the Electricity Regulation Act of 2006 opened the doors to this practice.
Persson describes wheeling as an accounting treatment where the addition of power to the grid is metered, and its draw from the grid is also measured. The first solar energy wheeling project in the country was SOLA Group’s supply agreement with Amazon Web Services in November 2021. Lenders have been supportive, providing strong lines of funding to back these projects.
The introduction of the South African wholesale energy markets is set to further transform the sector. This shift moves the country away from selling directly from one project to one buyer toward a system where more sophisticated methods of buying and selling energy are used. A competitive market is expected to emerge where any consumer, whether industrial or domestic, can choose their electricity provider.