Putting the power back in the hands of the consumer
South Africa is at a critical juncture, influenced by various significant factors shaping the country’s trajectory forward – all of which have far reaching economic and social implications, emphasising that the decisions made today will impact communities and generations to come.
In 2023, the average citizen spent 19.9% of the year with zero power owing to loadshedding, more than double the amount experienced in 2022 and almost 10 times as much as 2021.
According to senior economist Gaylor Montmasson-Clair, of the 11.5GW of renewable energy capacity installed in South Africa, 6.3GW is attributed to utility-scale generation through the Renewable Energy Independent Power Producer Programme (REIPPP). But quite remarkably, 5.2GW comes from private solar systems, of which half were installed last year alone. To put that number in context, 2.6 GW of solar was installed by private individuals and corporates across the country in 2023, more than the generating capacity of Kusile (2 397MW) or Koeberg (1 940MW). In practical terms, this equates to about 7.5 million solar panels, which would take up an area almost 100 square kilometres.
The City of Cape Town
The City of Cape Town is leading the way with a robust energy strategy that sets out to overcome the energy crisis in South Africa by building a sustainable energy system, with the plan for Cape Town to be a net-zero carbon city by 2050.
An integral part of the energy strategy, as explained by Kadri Nassiep, executive director of Energy at the City of Cape Town, is the stabilisation of the network as a response measure to the crisis faced. As he said in a joint Future Cities Africa podcast episode titled, “Addressing the Energy Crisis”, the transition to a ‘future-fit’ utility will provide an optimal energy marketplace that better serves its people while still maintaining municipal revenues.
The single biggest source of local government revenue is electricity. About 30% of the City of Cape Town’s revenue is derived this way. It’s therefore imperative that customers remain on the municipal grid to avoid ‘off-grid flight’, which poses a real threat to municipal income. It is equally important the city provides customers with energy alternatives and the option to access cleaner, cheaper power that aligns with their energy needs and production of their commodities.
Cape Town’s energy strategy
The private sector will play a crucial role in addressing the future electricity needs of Cape Town, reducing its reliance on Eskom through electricity wheeling. Wheeling is the purchase of energy from a large power generator such as an IPP – for example, a solar farm or a wind farm or a large rooftop solar producer, and the transportation of that electricity through the existing network or municipal grid to an end user or ‘offtaker’ (corporate or industrial user).
The introduction of electricity wheeling in the City of Cape Town Wheeling Pilot Research Project has many benefits, allowing customers to procure electricity independently from the city while making use of the existing infrastructure and reducing their carbon footprint.
Enpower Trading is one of the founding wheeling partners in the city’s electricity wheeling pilot, helping to implement the proof of concept. Having signed a master power purchase agreement (PPA) with one of Africa’s largest retailers, Enpower Trading is facilitating multilateral trades with the offtaker within the city, putting itself in a position to operationalise larger projects with the retailer over time.
James Beatty, CEO of Enpower Trading, explains that the benefits electricity trading brings to the South African marketplace include increased generation to the grid and diversification of supply. “The trader has the ability to encourage renewable energy supply without risk to municipal finances and lengthy processes, as well as an aggregate energy supply from various IPPs to meet a specific customer’s total energy demand across their multiple sites under one master customer PPA,” he says. “This increased liquidity, and the guaranteed savings, assist in mitigating off-grid flight and support our customers’ transition to 100% renewable energy as they journey toward net-zero.”
The future market
The future trading market will transform the way in which we purchase and consume energy. As the market evolves, Enpower Trading will collaborate with municipalities, regulators and other bodies to ensure municipalities remain revenue-surplus-neutral and collectively work toward the goals of South Africa’s Just Energy Transition: decarbonisation, affordability and security of supply.
Image credit: stockgiu/Freepik
