Energy

South Africa’s energy wheeling framework – a key step towards market liberalisation

South Africa’s energy reforms boost IPP access and wheeling framework growth. (Image source: Synergy Consulting IFA)

South Africa’s energy story is marked by systemic impediments and formidable challenges but also by consistent progress in different realms

While transmission continues to act as a bottleneck in the country’s transition from conventional to green energy, the regulatory improvements in wheeling arrangements as well as the refinements in the framework have paved a long way to fillip the impetus towards energy market liberalisation.

RSA started liberalising its energy market in 2011 when it launched REIPPPP round 1 to allow independent power producers to compete with Eskom, the state-owned power generator. Albeit, REIPPPP rounds continued with substantial fervor, Eskom continued to hold effective monopoly on power transmission and offtake. With an integrated utility, the country kept facing structural challenges around competition, regulatory framework and transparency that have marred similar geographies around the globe.

A revolutionary upheaval, however, came in August 2021, when South Africa's president Cyril Ramaphosa announced the increase in the exemption threshold for embedded generation projects from 1MW to 100MW. This meant that any private power generation project up to 100 megawatts (MW) could be developed without applying for a generation license from the national energy regulator, NERSA, as long as it was grid-connected, and registered with NERSA, even though a formal license was no longer required. Earlier, Independent Power Producers (IPPs) aiming to develop power plant for C&I (Commercial and Industrial) generation, were required to apply for a full-fledged NERSA license, in case the plants exceeded 1 MW. Application for the NERSA license used to be a process marked by prolonged delays leading to a convoluted and protracted process.

In December 2022, RSA achieved another key milestone by removing the 100MW cap as well. This led to a further liberalisation of the market and a sudden entry of IPPs into the energy mix. With all these major overhauls, transmission became a major point of contention in the RSA’s energy regime. Albeit transmission woes continue to provide a bottleneck to various key regions (such as the Northern Cape province), and full unbundling of Eskom is still to be completed, RSA’s wheeling framework is a commendable part of the unbundling vision and has enabled the country to progress on its way towards a greener future.

Prior to 2020, IPPs had limited interest in the RSA market and there existed no standardised national wheeling framework. However, with the removal of the cap on embedded generation licensing requirements, Eskom also introduced a formalised structure providing template wheeling agreement and guidelines around metering, settlements, and pricing of the use of system charges. Since then, Eskom has been able to efficaciously optimise its wheeling arrangements through some key theme areas:

Unrestricted access to all: RSA allows open access to grid to all qualifying IPPs (irrespective of whether Eskom or any other private consumer is the offtaker). The grid reservation mechanism works on a “first-ready, first-served” principle providing all IPPs a fair and competitive environment to vie for the limited transmission infrastructure.

Transparent pricing: The grid use of system charges and other applicable charges are based on publicly available frameworks and the computation of the same are available to all market participants.

Settlement procedure: Eskom uses a virtual wheeling framework allowing multiple off-takers to procure electricity form a single generator. A key implication of this approach has been the growth of energy traders in the RSA market. Akin to other developed markets, RSA’s long-term vision shall include full unbundling of the state-owned utility and a move towards a merchant-based market model. The extant wheeling framework has allowed a rapid growth of energy trading in the power market with multiple licenses being issued to traders in recent years.

Currently, some of the forward-looking municipalities are also pushing forward to have standardised wheeling arrangement to allow the entry of C&I players at the distribution network level. For instance, the city of Cape Town has progressed on preparing NERSA approved wheeling agreement as well as a framework for automated balancing.

A robust wheeling framework forms the backbone of private investment in any country energy market and RSA has exhibited that notwithstanding the transmission capacity bottlenecks, a well-crafted wheeling framework, with opportune regulatory practices in place, provided sufficient impetus to private generators, traders, and consumers to operate in the market. What really stands out in RSA’s case and can function as a guiding principle for other African economies, is the tandem that has been established between the reforms in the generator market and the introduction of the standardised wheeling frameworks. In addition to that, RSA’s reforms are also forward looking and enabling the market towards a decentralised merchant power model, as the energy settlement procedures put in place already account for a multiple offtaker model in the market.

The article is authored by Synergy Consulting IFA.

SEW-EURODRIVE champions energy efficiency across sectors

SEW IE3 electric motors offer energy savings in the beverage industry. (Image source: SEW-EURODRIVE)

South Africa’s adoption of Minimum Energy Performance Standards (MEPS) mandates that all newly imported electric motors meet IE3 premium efficiency levels

SEW-EURODRIVE, however, has long been ahead of this curve, having standardised on IE3 motors more than eight years ago. The company’s commitment to sustainability ensured that its customers transitioned to the advanced technology without bearing additional costs.

Willem Strydom, business development electronics manager at SEW-EURODRIVE South Africa, highlights that several industry sectors have been proactive in shifting towards energy efficiency. Rising electricity prices have driven industry to adopt IE3 motors, with SEW-EURODRIVE estimating that these motors consume 7% to 8% less energy compared to IE1 models. Strydom says that when paired with Variable Speed Drives (VSDs), energy savings can reach up to 15%.

“Energy efficiency not only reduces operational costs but also aligns with companies’ decarbonisation goals,” said Strydom. “As most electricity in South Africa still comes from coal, reducing consumption directly lowers carbon footprints.”

SEW-EURODRIVE supports its customers by conducting on-site energy assessments and product population surveys at no cost. “These evaluations identify inefficiencies, helping companies to plan their transition to IE3 motors strategically and cost-effectively. The data collected also provides early warnings about potential equipment failures, reducing downtime risks,” remarked Strydom.

To further ease the shift, SEW-EURODRIVE advises customers to prioritise upgrades in motor classes with lower stock levels and balance replacements between larger and smaller motors for maximum impact. VSDs are often recommended to manage peak energy demands, reducing penalties and extending motor lifespans.

Looking ahead, Strydom believes MEPS will accelerate the adoption of even higher efficiency standards, paving the way for IE4 and IE5 motors. SEW-EURODRIVE is already leading this innovation with its IE5 synchronous motors, which feature integrated permanent magnet technology and deliver up to 50% lower energy losses compared to IE3 models.

“SEW-EURODRIVE’s commitment to advancing energy efficiency is backed by our 300-strong global research and development team,” commented Strydom. “We are already pioneering IE6 technology, setting new benchmarks in sustainability and performance.”

With its forward-thinking approach and robust customer support, SEW-EURODRIVE continues to drive energy efficiency advancements in South Africa, helping industries meet sustainability and cost-saving goals.

Perkins Engines: strengthening the core, pioneering the future

Visitors to the Perkins stand at bauma can find out the latest about Project Coeus. (Image source: Alain Charles Publishing)

The Perkins pre-bauma press event in London provided a taste of what the power solutions company will be showcasing at bauma, which takes place from 7-13 April in Munich

At the event, delegates heard about Perkins’ initiatives to provide smarter, more sustainable solutions to support its customers with their diverse needs through the energy transition, and how its latest developments align with its focus on ‘strengthening the core, pioneering the future’.

In line with this, at bauma, Perkins will showcase the latest off-highway power system technologies, from fuel flexible optimised engines to products and services to support the transition to electrification, such as its hybrid-electric telehandler, where a 75 kW diesel-powered telehandler was converted into a hybrid machine, utilising a Perkins 48V battery system to enable electric-only operation.

Taking centre stage will be the 2606 diesel engine, scheduled to go into production in 2026, a new 13-litre engine platform designed to achieve best-in-class power density, torque and fuel efficiency for a wide range of heavy-duty off-highway machine and applications, from screeners , grinders and material handlers to compressors, pumps, construction machinery, mining equipment and tractors. It provides 340-515 kW rated power and up to 3200 Nm peak torque.

The engine supports quality, reliability and easier maintenance through numerous design enhancements, including the integration of components and a reduction in the number of leak joints by more than 45%. Together, the upgrades result in low fluids consumption and extended oil and fuel filter service intervals as long as 1,000 hours, reducing operating costs and downtime. The engine is HVO/renewable diesel and biodiesel compatible, and is compliant with EU Stage 5, US EPA Tier 4 and all other global emissions standards.

Also on display will be the 904J engine. Available in 2.8 and 3.6 litre variants, the 904 series offers a power range from 50 to 106 kw with agricultural, industrial and electric power variants. As of October 2023 more than 100,000 engines had been built and shipped. The 904J-E36TA, which comes into production in March 2025, the 106kw variant of the 3.6 litre engine, offers increased power versus the current 3.6 litre. With a torque of 566Nm and rated speed of 2200 rpm, it is certified to EU Stage 5 and US EPA Tier 4 Final.

Project Coeus update

Visitors to bauma can expect to find out the latest about Project Coeus, a partnership between Perkins Engines, Loughborough University and UK-based engineering specialist Equipmake, designed to support OEMS through the energy transition. An advanced hybridised alternative-fuel power-system to decarbonise the off-highway industry, it involves the development of a multi-fuel ‘drop-in’ hybrid powertrain. The project seeks to overcome a number of key performance challenges faced by the industry and OEMs as they look to adopt alternative fuels, providing the same performance as they would get with diesel and the ability to flexibly use different fuels, such as ethanol, methanol, biomethane and hydrogen. At the heart of it is a spark-ignited engine platform with an integrated hybrid system alongside the combustion engine to mitigate performance differences in the various alternative fuels.

“These advanced drop in power units are going to be key for helping our customers adopt future technologies required for their energy transition, delivering them a robust plug and play power, maintaining the same user experience, minimising the amount of design integration and minimising the amount of violations,” said Paul Moore, head of Powertrain System Integration at Perkins at the press event.

Augmenting the customer experience

Augmenting the customer experience is an important focus for Perkins. At the press event, delegates heard about Perkins Connectivity and Condition Monitoring. Seamlessly linking the user to their Perkins powered applications, Perkins Connectivity provides access to critical real-time data, enabling the user to make informed decisions with insights tailored to support proactive maintenance and maximise efficiency. It also enables access to Perkins comprehensive service network.

“You might find that the service network knows there’s an issue before anyone on site does. Minor issues can therefore be picked up when they are easier, quicker and cheaper to fix, before they become major issues,” said Jessica Langley, senior marketing consultant at Perkins.

“It’s about strengthening relationships with OEMS and its customers, and empowering them to be manage their costs, reduce their downtime and work more efficiently. Perkins Connectivity really redefines reliability, efficiency and sustainability. It’s more than just technology, it’s a support to our customers, whether they be end users or OEMs, every step of the way.”

Throughout the briefing, Perkins representatives emphasised the company's focus on collaboration with customers to understand and address future challenges and address the demand for smarter solutions that provide full life-cycle support. With the current uncertainties over future emissions regulations and the direction of alternative fuels, Perkins is a trusted partner offering flexible solutions and an agile response to the evolving conditions of the energy transition.

"Our customers and their customers now have a global footprint," said Andy Curtis, customer solutions director at Perkins."How do they develop machines with very different technologies and very different challenges around the world? There is no one size fits all. What we are here to do is really listen to our customers and provide that agile support."

bauma is the world's leading trade fair for construction machinery, building material machines, mining machines, construction vehicles and construction equipment. Perkins will be exhibiting at Stand A4.336

PPC and Yellow Door Energy partner for solar energy expansion

PPC and Yellow Door Energy sign a 24.5 MWp solar PPA, advancing renewable energy and sustainability in South Africa. (Image source: Yellow Door Energy)

PPC Ltd, a leading cement and related products supplier in Southern Africa, has partnered with Yellow Door Energy (YDE), a renewable energy independent power producer (IPP) in the Middle East and Africa, to sign a 24.5 MWp (20 MWac) solar power purchase agreement (PPA)

Under a solar wheeling arrangement, YDE’s solar facility in Leeudoringstad, North West Province, will supply clean electricity to four PPC operations through the Eskom grid. These facilities include PPC Slurry in North West, PPC Dwaalboom in Limpopo, and PPC De Hoek and PPC Riebeek in the Western Cape. The project will deploy more than 20,000 solar panels, generating 57.5 million kilowatt-hours (kWh) of renewable electricity in its first year and reducing carbon emissions by 59,800 metric tons.

“We are excited to announce the signing of a solar power purchase agreement with YDE, marking the beginning of a long-term partnership. This agreement is our second partnership to secure renewable energy which further demonstrates PPC’s commitment to reducing reliance on traditional energy sources. The project is another step towards achieving our strategic objectives to rebuild a profitable and sustainable company,” said Ernesto Acosta, chief operating officer at PPC.

Forbes Padayachee, CEO of YDE South Africa, said, “We are proud to sign this monumental long-term power purchase agreement with PPC. Through this solar wheeling arrangement, PPC is able to secure access to clean, affordable and reliable electricity without further physical constraints on their premises. At YDE, we remain dedicated to advancing renewable energy solutions for commercial and industrial entities, creating local jobs and contributing to South Africa’s energy security and Just Energy Transition.”

A 43 km overhead power line will be installed to link the solar park to an Eskom substation, strengthening the grid and increasing accessibility to clean energy.

As the independent power producer, YDE will handle the financing, design, construction, commissioning, operation, and maintenance of the Naledi Ya YDE Solar Park for the duration of the PPA. The power purchase agreement model is gaining popularity among businesses seeking to transition to solar energy, allowing companies to reduce energy costs without upfront capital investment or operational risks, while maintaining their focus on core activities and benefiting from reliable, cost-effective clean electricity.

MCA receives new equipment for Angolan solar work

Angola's Luena solar park. (Image source: MCA)

MCA Infrastructures SA, a subsidiary of the Portuguese contractor, M.Couto Alves, S.A. (MCA) Group, has secured additional funding support for the purchase of various mobile construction equipment to continue work on one of its flagship Angolan energy projects

UK Export Finance (UKEF) has agreed to support MCA Infrastructures in respect of its purchase of mobile construction equipment worth £12.5mn (US$16.2mn) via supply and logistics experts, Dints International Ltd.

The equipment list includes items such as excavators, stackers, diggers and generators, as well as cars, trucks, vans and trailers.

MCA Group acts as an engineering, procurement and construction (EPC) contractor on multiple projects, including a flagship rural electrification programme in Angola, where the equipment will initially be deployed before being utilised elsewhere in the region.

A loan guarantee issued by UKEF to Apple Bank means that the Portuguese contractor operating in Angola can now access finance to purchase the new equipment through Dints.

Established 18 years ago, Dints is a London-based project integrator bringing together buyers, suppliers, logistics providers and funding partners.

Among the the UK-based suppliers to the project are Energy Group, Yorpower, and transport specialist, Kings Trailers.

“It is an honour to be supporting the energy transition in Angola, which is a new territory for us,” said Stephen Peal, Yorpower’s group managing director.

The rural electrification scheme that the machinery will be deployed on is an integral part of plans to expand energy access across Angola and will ultimately supply sustainable power to more than a million people.

The financing behind the electrification drive is also being supported by lender Standard Chartered Bank and Export Credit Agency Euler Hermes.

In May 2024, MCA announced that around 44,000 solar panels had been put into operation at the Luena Solar Park in Angola to bring clean energy to more than 55,000 people.

Located in Angola’s Moxico province, it marked the fourth solar park out of seven that the Portuguese company is building.

At the time, MCA said that, in conjunction with a new interconnector between a Wartsila thermal power plant and Luena SE, the new solar park would help to make better use of renewable production and improve the stability of the system, as well as reduce overall fuel consumption.

Working in a consortium with a US company, Sun Africa, on behalf of the Angolan government, MCA’s solar roll-out project will eventually have a total capacity of 370 MW.

Read more:

MCA delivers solar plants in Angola