Eskom’s virtual wheeling pushes South Africa’s renewable energy frontiers but faces market access hurdles
Eskom’s Virtual Wheeling initiative marks a significant step towards expanding renewable energy access and optimisation in South Africa, targeting businesses seeking greener, more cost-effective electricity solutions. Virtual wheeling allows Independent Power Producers (IPPs) to supply electricity directly to end-users through the existing transmission or distribution network. Crucially, this system removes the need for consumers to be physically connected to the electricity generator, thereby offering enhanced flexibility and potential cost savings for businesses, alongside the benefits of increased energy security and a reduced carbon footprint.
The mechanism supports a range of participants across Eskom’s national grid and municipal networks, facilitating electricity transactions between multiple generators and off-takers. By allowing power generated from renewable sources to be wheeled, that is, transported across the grid from optimal generation points to various end-users, this product encourages investments in cleaner energy and supports corporate sustainability ambitions. According to Eskom, virtual wheeling also streamlines power purchase agreements, allowing companies to aggregate energy consumption across different locations using smart metering technology. This enables enterprises with distributed operations to access renewable energy at scale more efficiently and cost-effectively.
Vodacom has become the first South African company to fully implement virtual wheeling, demonstrating the model’s viability for large-scale corporate energy procurement. This move is part of Vodacom’s broader commitment to achieve net-zero greenhouse gas emissions by 2035. The telecommunications giant’s adoption of virtual wheeling exemplifies how the platform can help businesses lower costs, stabilise the grid, foster job creation in the energy sector, and contribute meaningfully to climate change mitigation efforts.
Despite these advancements, challenges remain regarding the inclusivity and competitive potential of Eskom’s virtual wheeling platform. Notably, Eskom’s decision to exclude electricity traders from participating in virtual wheeling has attracted criticism. Industry voices argue that this exclusion limits the scope for private sector involvement in power generation and trading, contravening government policies aimed at fostering a competitive wholesale electricity market established by President Cyril Ramaphosa in 2021. Moreover, Eskom’s policy disallows municipalities with outstanding debt for bulk electricity supply from engaging in wheeling agreements with independent power producers or energy traders, further restricting market participation.
These restrictions raise concerns about Eskom’s dominant position over national transmission infrastructure via the National Transmission Company of South Africa (NTCSA) and its potential effects on market dynamics. Critics suggest that excluding traders could stifle innovation and delay the competitive restructuring essential for South Africa’s energy transition. The government’s vision for an open, competitive electricity market remains in tension with these corporate policies, indicating the need for ongoing regulatory scrutiny and stakeholder engagement.
Overall, Eskom’s virtual wheeling initiative represents an important mechanism for integrating more renewable energy into South Africa’s power mix and supporting businesses’ sustainability goals. However, balancing Eskom’s control with broader market liberalisation remains a critical challenge as the country seeks to accelerate green energy adoption while ensuring fair access and competition in the electricity sector.